Tag Archives: mastercard
FedNow
Very short Blog – Recapping a few tweet streams.
I think FedNow is a great effort to provide an open alternative to TCH’s RTP. I’ve spoken with, and consulted for, the KC fed on a number of occasions and provided my input to the FedNow service back in 2013. Per my blog last week the survey result from the Fed’s efforts found “emergency bill payment” as the top consumer use. Paying someone faster brings on risk. The Fed depends on banks to manage risk and price that risk. As a former banker running payments at 2 of the largest banks I have a view here.
A2A, Fed Now and Real Time – Threat to V/MA? Nope.
Sorry for typos
My good friend Dave Birch wrote a piece in Forbes today on Account to Account transfer threat to V/MA. I wanted to provide an alternate view. This will likely be a multi part blog.. today I’m starting with the consumer and the merchant (from a US perspective).
Amazon – Affirm
Key Reading
- Affirm 3Q Earnings (last night)
- Earning Transcript
- Affirm Investor Forum (28 Sept)
- Amazon take Venmo (my blog)
- Affirm Debit+ (my blog)
- Amazon/Visa Battle (my blog)
- Amazon Co-Brand is In Play
November is turning out to be a very big week in payments! The top investor question seems to be how will V/MA be impacted? My response.. In next 2 yrs.. Less than 1-2% of US GDV however Affirm is turning out to be the leading company to watch in creating a V/MA alternative.
New Decoupled Debit – Affirm/Plaid/Marqeta
Riding on my blog Plaid and Decoupled Debit.. It looks like Plaid and Marqeta just created a new product with Affirm as the first customer.
Affirm Debit Card – https://www.affirm.com/debit
Visa vs Amazon – When Merchants Get Leverage
Updated 17 Nov
At Money2020 this week and I have to say I’m having a blast. Seeing friends face to face and getting back to “normal” was well worth taking my first plane flight in 20 months.
Visa Announces earnings today at 5pm, the big question institutional investors are asking me is about the Amazon – Visa discussions. It is a big game of chicken right now, with earnings ramifications. To understand whats going on here, let me attempt to give some abbreviated history.
Apple Pay Fees (Short Blog)
Thought I would give more detail on whats going on with V/MA, Issuers and Apple (from WSJ article yesterday Apple Pay Fees Vex Issuers). Perhaps I’ll collect a fee from the WSJ.. odd that I mention Apple Pay fees on Monday to have it come up in the WSJ on Tuesday. Oh well..
Case for CBDC – Market Efficiency
Sorry for typos here.
As most of you know I love to read the arcane (ex favorite book is Weak Links – related blog) and I love economists. Today I’m reading some of Thomas Phillippon’s research (NYU’s economist and author of The Great Reversal: How America Gave Up on Free Markets). Many of you will recall I covered Dr. Phillppon’s work in my 2015 blog Changing Economics of Payments. My summary of Phillippon’s work:
EPI – Quick Take
16 banks in Europe just announced the European Payment Initiative (EPI) to tackle retail payments.
In November 2019 the Eurosystem relaunched its retail payments strategy, calling for increased collaboration between European stakeholders to provide payment services that meet the needs of European customers and strengthen the autonomy of the European retail payments market
European Central Bank, PR July 2 2020
What are the drivers? The ECB asked banks to do it… thats just about it.
Finicity, Plaid, Tokens and Network of Networks
Summary
- Primary driver of finicity/Plaid deals is not open banking, but in support of the “network of networks” strategy.
- The owner of the consumer directory, will rule payments. Tokens are the central battle field for trust networks (and payment network) consolidation as well as new services.
- MA lost out on the Plaid purchase, but is likely to end up far better off for it.
- The Visa/Plaid deal is likely to fall through as the retain consumer credentials for 5yr (claimed by class action).
- V/MA will likely own the payment token directory
- Visa is leading – 1B tokens issued by Visa (acquisition of BellID/Rambus)
- Mastercard Track successfully leads the market in global B2B Least Cost Routing
- V/MA have substantial hurdles in expanding the directory beyond payments
- Few direct consumer or merchant relationships
- Bank and Apple/Google leadership in Customer Identity/Trust
- Trust is the core of bank risk management (and Bank margin)
- Network effects decrease transaction costs for established services and increase value (acceptance). However they have the reverse effect on new services.
- Value/Margin is migrating to the ends of the network and many new networks are forming.
- The energy to manage participation in multiple networks is dropping (with Mobile). Enabling specialized networks that cater more finely to precise needs of each node.
- V/MA will see substantial growth in core payment volume with continued network effects and the breakdown of Payment silos.