Category Archives: Networks/Schemes

Posts covering payment networks and schemes

Why Closed Chains Work Best for Banks

Posted on by
Reply

a16z crypto published Banks Don’t Need Closed Blockchains (written by Rebecca Rettig of Jito Labs). The legal reading is solid. The BSA and OFAC ask for control proportionate to identified risk, not zero risk, and no rule says a bank must own or screen the infrastructure its messages travel over. I have no argument with any of that.

HOWEVER, the conclusion does not follow. Banks are not sitting in permissioned networks because a statute traps them there. They are sitting there because that is where their trust model, their commercial agreements, investments, and their competitive advantage already live. I made this case in The Realities of On Chain Finance: Why Closed Ledgers Will Lead the Way and the last 18 months have only confirmed it.

Continue reading →

ApplePay at Walmart

Posted on by
Reply

Walmart announced yesterday that tap to pay arrives at select Walmart and Sam’s Club locations on August 24, with all US stores and clubs by the end of 2026 and fuel stations by mid 2027. The largest retailer in the country, and the last major holdout on contactless, is turning it on. What a great “going away” present to Jennifer Bailey!.

This is a bigger deal than the press release suggests. Walmart did not resist contactless because it disliked the technology. It resisted because contactless threatened a payment cost structure it spent twenty years building. The news here is not that Walmart added a feature. It is that Walmart concluded the feature no longer costs it anything.

For readers who want the plumbing, I laid out the EMVCo and tokenization dependencies in Understanding ApplePay in PIN Debit (May 2026). This post is the business version.

What I told Apple, repeatedly

Jennifer Bailey at Apple would always ask me the same question: “How can we get Mike [Cook] to accept ApplePay?” My answer never changed, I told her “It was not about Apple.” It was about three things:

Continue reading →

Processors: Understanding Competitive Dynamics

Posted on by
2

Warning – Big Blog 12 Pages

The last three weeks gave us a full sweep of processor earnings, and the results were a mixed bag (a phrase that undersells what actually happened). What we saw was not the processor sector moving together with a common tide. It was a sector splitting apart. Adyen raised guidance and jumped 16% in a day. Toast added a record number of locations and raised its full year outlook. On the “bad side of town”, we have Fiserv, which cut guidance, missed consensus, and is now down roughly 23% for the year with a brand new CEO. FIS is down about 36%. The gap between the best processors and the worst has never been this wide, and I do not think most investors have a working framework for why.

That framework is what I want to lay out here.

You need to be logged in to view the rest of the content. Please . Not a Member? Join Us

Tokenization and Trust

Posted on by
Reply

Tokenization is taking hold. That much is settled. It is showing up in financial market clearing and settlement, payments, and in products that did not exist three years ago. What is not settled is what “tokenization” actually means.

My read: the majority of tokenization efforts are best categorized as updating existing flows between existing parties using new DLT technology. Improving flows is not the same thing as remaking a market, and the press releases rarely distinguish between the two. I recommend you parse the hype carefully as it is at or near its apex.

Regular readers will recognize the theme, and I laid out the taxonomy in 101 Update: CBDCs, Stablecoins and Tokenized Deposits, and also argued in Stablecoins: A New Model of Trust enabled by Technology that the defining innovation is the trust architecture rather than the technology, and applied it most recently to SWIFT’s blockchain announcement in Parsing the Hype.

Continue reading →

Stripe/Advent – PayPal: My Thoughts

Posted on by
Reply

Two weeks ago I wrote up the Reuters report that Stripe and Advent had offered $53B for PayPal. That post was mostly reporting, plus some structural background on operating models and processing volumes. This one is opinion. You have been warned.

Let me start with the disclaimer that matters. I am not a financial analyst. I have no idea whether paying roughly 7x PayPal’s ~$8B in EBIT is a bargain or bizare. Kenneth Suchoski at Autonomous Research put the implied multiple at about 11x 2027 NOPAT and called the financing “a lot of debt to put on this asset,” which sounds about right to me, but he does this for a living and I do not.

What I do know something about is payment networks, merchant behavior, and consumer adoption. On those three dimensions I have 3 concerns:

You need to be logged in to view the rest of the content. Please . Not a Member? Join Us

Stripe/Advent offer $53B to buy PayPal

Posted on by
Reply

Sometimes the biggest signal is not the price, it is who is showing up with the money. This morning, Reuters reported that Stripe and Advent International have jointly offered to acquire PayPal for more than $53 billion. Stripe, the largest privately held payments company on the planet, has walked into the room and said, in effect, we would like to own the incumbent. That framing alone reorganizes how you should read the last five years of PayPal’s decline and the next five years of network competition.

I have been writing about PayPal’s structural problems for a long time. Most recently in PayPal, Alex is Gone, Enrique is In. Recommended Focus, where I argued that Enrique Lores was inheriting a “dumpster fire” of acquisitions and shifting consumer focus, and that the only path forward was decisive surgery on the operating model. A $53B “take private” from Stripe and Advent is one very specific answer to that question. Today’s blog is a quick overview of the Reuters report together with my own read, and questions any investor should be asking before they get out over their skis on this.

You need to be logged in to view the rest of the content. Please . Not a Member? Join Us

SWIFT – Tokenized Payments/Deposits – Parsing the Hype

Posted on by
Reply

Last week SWIFT announced that 17 of its member banks tested its new blockchain ledger, positioning the network for “tokenized cross border payments” (SWIFT press release). Cue the headlines. My view: this is a me too announcement from an incumbent that is meaningfully behind, and it does not change the trajectory of where tokenized money is actually settling.

The real story is that the big banks are not waiting for SWIFT. They are building their own tokenized deposit networks, joining Canton, integrating with commercial customer platforms like Fireblocks, and quietly redrawing the settlement map. SWIFT gets to be one option among many, useful when a correspondent bank leg or a customer requirement forces its inclusion. It is no longer the default.

Regular readers will recognize this thesis from prior posts. See JPMorgan, Citi and TCH: Tokenized Deposits ON Chain, Augustus Protocol and Emerging Settlement Standards, and the 101 Update on CBDCs, Stablecoins and Tokenized Deposits for the underlying architecture and taxonomy. This post extends the thesis by explaining what the SWIFT announcement actually tells us and what it does not.

Continue reading →

Hypothetical Scenario — Using Star as Entry Point for Zelle at POS

Posted on by
Reply

Summary. This is my best case scenario for a STAR acqusition and as a banker I still wouldn’t do it. PIN networks are archaic. I would externalize Zelle for POS and sell it to merchants based on value (ex instant funds availabiltiy, liability shift at POS and eCom). For the tech, I would subcontract the service to Visa while I own the network.  Don’t bother reading this blog unless you are a payment geek that wants to think about the macro options on a “new debit network”. Remember, even if the top 3 banks moved to a new debit network, it would only be a 2% revenue hit to Visa. This is almost noise.

Background

I’ve spent this week writing about what a top‑4 bank consortium buying Fiserv’s Star network would and wouldn’t accomplish. On Monday I laid out five business and political reasons the deal is unlikely to happen. Tuesday’s blog explained how ApplePay/PIN-debit works within a technical deep-dive. This blog outlined why owning Star doesn’t buy the tokenization and provisioning path that Visa still controls. Yesterday’s retailer and industry feedback captured what I heard from the merchant and processor side stakeholders. One of the stakeholder ideas surfaced with a new idea worth sitting with: what if you didn’t buy Star to run PIN debit at Durbin-exempt rates — but instead as the on-ramp for accepting Zelle at the POS?

Continue reading →

FISV: Star Sale? Retailer and Industry Feedback

Posted on by
Reply

Short update on my industry discussions yesterday (in very brief form). 

Retailers

  • Convinced US Banks would attempt to follow COF/Discover model and that Banks were not concerned about the politics. 
  • Emphasize banks want control, with most seeing that BAC/WFC would make sense as owners of STAR
  • Agreed that retailers would react to price increases, but only top 20 retailers have payment teams with enough depth to act on a plan (ex turn off Star).
  • Believed acceptance rate and processor incentives would be a key hurdle, but that if pricing was around 125bps there was room to create superior processor incentives. 
  • Loss of Tap to Pay and eCommerce (ie no PIN Debit) were consensus consumer impacts with no clear workaround. 
  • Agree that retailers would strongly lobby OCC and CPFB that this was an obvious effort to end run Durbin. May seek to block acquisition. 
  • Discover is an EMVCO member with most tools that would allow conversion of Pulse to dual message. No path for STAR (or EMVCo membership)
  • Bank Consortium could use this as a path toward Zelle acceptance at POS (for 125 bps). This was probably the biggest “new” insight I gained

You need to be logged in to view the rest of the content. Please . Not a Member? Join Us

Understanding ApplePay in PIN Debit

Posted on by
Reply

Payment Geek detail on the EMVCO Dependencies of Debit and How Cap One Solved It

This is a technical addendum to today’s post on the reported JPMorgan/BofA/Wells/PNC exploration of buying Fiserv’s Star network. That post laid out five business and political reasons the deal is unlikely to happen. This one goes underneath the business case to the technical architecture that makes the wallet portion (ie ApplePay, GPay, SamsungPay) of the problem particularly ugly for any bank that thinks owning a PIN debit network gets them out from under Durbin.

The short version: an issuer that buys Star cannot simply route its ApplePay volume through Star. The tokenization and provisioning plumbing that makes Apple Pay work belongs to Visa and Mastercard, sits inside a standards body (EMVCo) that issuers are not members of, and is architecturally structured around the card brand on the card (not the issuer that issued it). A bank that owns Star still can’t put a Star token in Apple Pay; it is a new AID in the phone.

Continue reading →