Interchange is going toward 0.. So what?

The impact of interchange going toward 0 should be negligible for V/MA, perhaps even a positive as it provides opportunity for networks to expand their services

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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DeFi, CBDCs and Web 3.0

My perspective has been evolving as I work to build out infrastructure for “when Crypto grows up” in my new Company. I’m pleased to report that Accept Payments (acc3pt.com) went live this month and is expanding our private rollout as we fine tune all of the CX. Thought for the day… Its about trust.. 

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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.

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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). 

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Incentives – How will Visa Amazon Play Out?

I outlined the Visa Amazon dispute in my blog 4 weeks ago. Today, Visa is confidently projecting it can bring the issue to a close. For the exec team to communicate confidence, my presumption is that they have both a primary strategy and a fall back strategy.  Given that the big players influence payments so heavily, let me lay out a few scenarios on how this could wrap up. 

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ACH, A2A and Marketing Incentives

(sorry for typos). I’m up at 5am this Saturday and have all kinds of things I’d like to write about: DeFi, PayFacs, Opportunities in B2B payments, Platform strategies of Shopify/Stripe/Adyen.. I’ve settled on a short blog surrounding ACH, A2A and Marketing incentives. The key question I will be answering today: will an ACH based A2A or ACH checkout option develop threatening V/MA?

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Amazon – Affirm

Clearly if Affirm/Amazon was an isolated incident, then there would be no impact to V. But Adding Walmart and other large merchants does start to impact Visa’s GDV at a 2% level in a 5 yr view

Key Reading

  1. Affirm 3Q Earnings (last night)
  2. Earning Transcript
  3. Affirm Investor Forum (28 Sept)
  4. Amazon take Venmo (my blog)
  5. Affirm Debit+ (my blog)
  6. Amazon/Visa Battle (my blog)
  7. 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.  

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Amazon Takes Venmo…

This is a win for PayPal and Amazon. Paypal gets: 1) incremental volume and 2) consumer behavior for Venmo in eCommerce, 3) easy extension into BNPL with Venmo transaction.

Big news from PayPal’s earnings yesterday was Amazon taking Venmo. I wanted to summarize the 15 tweets on the topic and provide a little more background into the dynamics. 

Amazon is an amazing company from a people perspective, perhaps the best TEAM I’ve had as a customer. They always proceed within a plan and purpose. So why Venmo?  As I related 2 weeks ago, Amazon is working to reduce the costs of payments. They have managed fraud down to 3bps.. So why can’t their processing costs look a lot more like Walmart? They have been successful in achieving this in EU (Sepa DD) and India (see blog), but the US remains (by far) the highest cost geography. 

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