Short arcane post. Dual routing of debit in ecom is much more complex than I thought. A puzzle and my head is spinning. Hang with me here as I don’t want to write a novel. This only applies to debit in the US.
The key take away? Competing PIN networks have new headwinds in tokenized PANs. Tokenization with a liability shift will protect Visa debit.
Continue readingHappy After Thanksgiving! Hope everyone was able to enjoy a wonderful time with family and friends. Today is the 3rd installment of the series, a long blog.
The next big network wave is here. Call it web 2.5 or 3.0, but the integration of payments into “everything” is a major event. Payments are the “trust layer” that TRANSFORM anonymous nodes providing uncertain service into known, defined and guaranteed service providers. Effective communities require value exchange and “trust”. The payment trust function enables networks to evolve from “cost free” discovery and information sharing, into transactional resource/service exchange: from read-write to read-write-execute. Sure we could call the wave “trust” but the only ubiquitous “trust network” is payments so I prefer to keep payment wave as the naming convention.
Per my June blog BNPL – Travel Example, I laid out how Airlines were a logical focus for BNPL. It seems that Issuers are either reading my blog, or coming to the same conclusions as SRC is likely to launch first with Airlines.
Continue readingShort Blog
I’ve had quite a few inbound calls on Durbin and Debit in eCom so I thought it was time for a short blog. Note this is my 90% confidence view talking to 3 of the top retailers and 2 of the top processors.
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Continue readingThe Bull Case for V/MA (24 pages).
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Part 1 – US Payments Environment covered the complexity of the US payment environment and the challenges faced by top banks in modernizing their systems (where all systems live forever). There are many types of payments: bill payments, A2A, P2P, wires.. Today the focus is on how banks intermediate commerce. Banks MUST have networks as every bank can’t connect to every consumer/merchant. Effective Bank networks (aka rails) are NOT a commodity service, but one that allows the banks to leverage their unique ability to assume risk.
UPDATE – Nov 29 2022 – Note that I have conflated the relationship between SRC and 3DS 2.0. 3DS 2.0 is the authentication protocol used by SRC. 3DS 2.0 has been widely adopted as a mandatory replacement to 3DS 1.0. Part of the driver for adoption was the EU SCA mandate. SRC has NOT been widely adopted as it is a fairly broken consumer experience at the moment.
I’m at M2020 today and it has been a “back to normal” fantastic event. Let me put my “merchant hat” on for a story from their perspective.
Apple and Goldman Sachs announced the forthcoming launch of high yield deposit account focused on increasing the value of Apple Card’s Daily Cash rewards. Operating as a kind of rewards sweep account, customers that register for the new account will have “their Daily Cash [move] into a new high-yield Savings account from Goldman Sachs”.
I hope to finish part 2 – Power of Bank Networks tomorrow (12-15 pages). In the meantime I have to recap a few key developments this week.
Continue readingAssessing the Environment and Setting the Focus (part 2 – Power of Bank Networks)
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Must read FT article “How JPMC’s plan to kill credit cards split the bank”. The article discusses Jamie Dimon’s internal mandate to drive a new payment network. I was shocked with the level of internal org quotes here. In my view, Jamie is the best bank CEOs in history (based on performance and talent coming out of JPMC). As a former banker, I know how hard it is to move the ship. However, FT is wrong. Chase’s efforts ARE NOT about killing credit cards, but rather creating something much bigger.
This is a long blog..
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