Tag Archives: debit

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

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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?

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FISV: Star Sale? Retailer and Industry Feedback

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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

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Durbin Debit Fees Reduced

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In a significant ruling on yesterday (Aug 7)) U.S. District Court Judge Daniel Traynor struck down “swipe fees” cap that non-exempt banks can charge merchants for debit card transactions. The decision found that the Federal Reserve had exceeded its authority by allowing these fees to be higher than intended by law (ie include provisions for “fraud”).

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Retail Banking and Stablecoins

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Friction, Float, and the Future

As a Banker, Founder and Payment Historian who has spent too long watching icebergs melt, I’ve seen many technologies promise to upend the banking industry. Most have been evolutionary, not revolutionary. But the advent of digital dollars, particularly consumer-facing stablecoins, are unique. Payments are the core of retail banking and profitability. Payments are a networked business, not just in card but in every consortium and association. As I outlined in The Power of Bank Networks, these networks are the engines that drive economies and how banks connect to the environment. For my colleagues in banking and payments, understanding how (or if) stablecoins impact payments is very important.

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

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Short Blog – Free Content

© Starpoint LLP, 2023. No part of this site, blog.starpointllp.com, may be reproduced or retransmitted in whole or in part in any manner without the permission of the copyright owner.

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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