A2A, Fed Now and “Instant” Payments – Threat to V/MA? Nope

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My good friend Dave Birch wrote a piece in Forbes last week 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).

No new information for my frequent readers, just pulling together some of the latest data (see PIX below).

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New MA Rate Tier for Installments (ApplePay Later)?

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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Interchange is going toward 0.. So what?

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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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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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.

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