Driving Vision of Durbin? Bi-Lateral Connections?

My latest G2 from people involved in shaping Durbin is that retailers see an opportunity to end-run networks in bilateral deals AND direct (alternate) routing. To be clear, issuers have always been able to strike bilateral deals directly with a merchant. What they have not been able to do is route these transactions off-network. 

I now have 70% confidence in the forces shaping Durbin (still no threat to V/MA). 

© 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.

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Durbin 2 – Impact on “Wrapping” Rules?

A highly technical “what if” scenario involving a long-sought after change by top US card issuers. What if Durbin credit routing bill were designed to eliminate network wrapping rules?

© 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)?

Rumor is that Mastercard plans for a new rate tier to support installments and ApplePay Later. 

Short Blog

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

Continue reading “New MA Rate Tier for Installments (ApplePay Later)?”

Apple Finance – ?Tipping Point?

A tipping point for consumer finance? Apple is doing much more than creating a consumer finance arm (ie in the model of GM/Ford) they expanding consumer access to credit beyond their products, based upon the unique “instant” distribution they have and their knowledge of the consumer.  This platform will support the distribution of their own unique products (Apple Pay Later) as well as partner products (Apple Card with GS) and instruments core to how consumers pay (V/MA/Amex and domestic schemes). 

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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Apple Pay Later – What is it?

Apple announced a new service at WWDC 2022 yesterday (Youtube – ~21:00 in). What is it and how does it relate to their recent acquisition of Credit Kudos?

Apple announced a new service at WWDC 2022 yesterday (Youtube – ~21:00 in). What is it and how does it relate to their recent acquisition of Credit Kudos?

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Apple Tap and Pay – Square and Why It is a Big Deal?

Apple is just beginning to build a payment platform business for both consumers and merchants. If the cost of issuing a card, or acquiring a merchant, is 0.. What does this do to bank “relationships” and products?

6 June 2022

Square’s stock (aka Block) took a big jump after last week’s announcement that they would also be a partner in ApplePay’s new ability to accept payments. Today I thought I would cover what this will (likely) look like and 5 reasons why Apple Tap and Pay is a big deal. 

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CBDCs – Growth Opportunities for US Banks

My view is that CBDCs offer banks a transformational opportunity to reinvent payments and retail banking. The attributes that make CBDCs great are different, and in conflict, with today’s retail banking. But these differences are not necessarily a threat. What do banks see in CBDCs that causes them to go into defense mode? Why should you look at them in a different light?

The future for a US CBDC is uncertain. While President Biden signed an executive order in March 2022 directing the government to “Explore a U.S. Central Bank Digital Currency (CBDC) by placing urgency on research and development of a potential United States CBD”, US banks seem dead against it.

This is my third blog on CBDCs, today the focus will be on the societal benefits of CBDCs, current bank resistance, and the opportunities for banks if they embrace it. The previous 2 blogs are blow and I’ll try not to repeat myself:

  • Digital Dollar (March ‘21) – Inventory of Central bank efforts and drivers with key detail on China’s digital yuan. 
  • Case for CBDC – Market Efficiency (June ‘21) – Is focused on the benefits to the unbanked and in reducing friction in low-value payments. 

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Identity Will Define the Future of Payment Networks (and more)

How others accept and validate our identity is core of payments (see Trust Networks and Authentication in Value Nets). The structure, exchange and assertions associated with identity are also 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). 

©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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