Tag Archives: mastercard

Durbin 2 – Impact on “Wrapping” Rules?

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© Starpoint LLP, 2022. No part of this site, blog.starpointllp.com, may be reproduced in whole or in part in any manner without the permission of the copyright owner.

A highly technical “what if” scenario involving a long-sought after change by top US card issuers. I’m fortunate to have the exec teams of just about every payment network, processor and FinTech read this blog. I have 3 main drivers for writing today:

  1. Start a community discussion
  2. Assess the potential for a much more strategic driver behind the proposed Durbin bill
  3. Most “change” in US payments is driven by 7-10 players: networks, top issuers, Google, Apple, … etc. These changes have an enormous impact on the FinTechs building around them. I’m hoping to help these small companies plan around these changes as the only advantage of a start is speed.

Note I DO NOT think this scenario is likely, but rather possible (30% probability). Historical context is key and the only reason I’m spending time on this today is that 27 bank CEOs have been discussing this for over 10 yrs.

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New MA Rate Tier for Installments (ApplePay Later)?

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Quick 18 Aug update to Aug 1 blog below. This new rate tier was confirmed by Bloomberg this week. According to Bloomberg, Settlment product acceptance is optional for merchants (does not operate in Accept All Cards rule). Optional acceptance is quite surprising. I surveyed 3 top 10 merchants (non-grocers) and couldn’t find one that plans to sign up for the product (other than Apple).

Note that card based BNPL (consumer BNPL) has no proven market data showing increased conversions. My inclination is to believe Card based BNPL conversion will closely mirror a normal credit card. See the rationale in my blog Three Flavors of BNPL.

As I outlined in June, Apple Pay Later will be (est Oct)  is the first major launch customer of Mastercard Installments. A large retailer just related that Mastercard plans for a new rate tier to support this product. 

“Somewhere around 300 bps” – Top 5 US Merchant

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BNPL Travel Example – Short Blog

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Short blog today on an example BNPL opportunity and the differences between a consumer BNPL solution like Apple Pay Later and Merchant integrated solutions from providers such as Affirm (or SQ/Afterpay see Three Flavors of BNPL).  Today Air Travel and Vacation packages are the focus.

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Apple Finance – ?Tipping Point?

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Bloomberg beat me to the punch with their great article last night on Apple Pay Later and Apple Finance LLC (must read). Well, I was certainly wrong about one big thing in my Project Breakout blog “Apple doesn’t want to be a bank”. Quite frankly I believe even Goldman Sachs was surprised by the scale of what Apple is building. Last night I outlined the key points:

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Trust Assertions – Identity Will Define the Future of Payment Networks

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©Thomas Noyes, May 2022

My blogs last week have me thinking about the changes going around in Identity. This will be a long blog. Typo warning.. I’m still revising. 

The number one thing I look for in payments is change: volume, technology, behavior, data, …etc. Effective networks are notoriously hard to change, but they are also very resilient (see blog). Small changes in data flows, can lead to significant changes in margin and “control”.  Margin and control guide both public and private investment (see Evolution of Visa and Mastercard Beyond Payments). 

Identity is our most important asset — it’s literally who we are. 

Our complete “identity” is known to no one, as each entity we interact with has a partial view of us based upon what we chose to give them and what they observe. How others accept and validate our identity, and how others share insight about us, is the core of payments (see Trust Networks and Authentication in Value Nets). The structure, exchange, and assertions associated with identity are defining: web3, DeFi, Crypto, CBDCs and the Metaverse. These are not separate silos, but rather overlapping ecosystems that must interact, thus the importance of bridging identity across networks/domains (see Blog – Trust is domain specific). 

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Secure Remote Commerce – May 2022

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Short Blog. I wanted to follow up on the last point I made in Bank ID Service – What Is It?

Some US Banks are refusing to jump on board SRC. As managers of risk, Banks are reluctant to accept network services which level the playing field in both managing risk and “diluting” their brand.… In some respects Authentify is a response to SRC.

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eCom Innovation Success – Shop Pay

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Short blog as follow up to yesterday’s blog on Acceptance Hurdles in eCommerce. Successful innovation requires a great new customer experience and/or economic model. The most recent success in the US is Shopify’s Shop Pay.

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Authentify – Bank ID Service

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Apologize in advance for typos.. did not proof yet

Press Release

Today’s WSJ Article on Zelle.

Congrats to Early Warning and their participating banks in the Launch of the Authentify wallet! A service 6 yrs in the making and driven by my good friend and former EWS president Eric Woodward.

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Interchange is going toward 0.. So what?

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There are only 3 major markets where credit card interchange is not regulated: US, Japan and Russia. In these markets, Issuers use interchange (US 130bps-270bps) to power consumer reward programs (see Tilting Networks Toward Merchants – 2015) and card marketing.  The ROW has credit interchange regulated to ~30bps and debit 20-30bps, and the reward programs are much different (Barclays UK below). But regulating payment interchange HAS NOT resulted in volume loss for V/MA, to the GREAT frustration regulators.. this is a key point (more later).

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