Dave, I disagree for US and certainly for ROW. Here are my counterpoints
- The "Cost" of payments is not uniform. Large merchants have managed debit down to $0.06 and credit to ~50bps. The fee growth you outline includes all value added services (VAS). As more transactions move to eCom (ex buying groceries online) more eCom services get used. US card fraud rates are trending downward significantly.
- The top 20 eCom merchants I speak with have made significant investment in managing fraud. Its all built around card. A2A is like taking a check. Merchants have no desire to grow their collections team.. a unit they just shut down 5 yrs ago.
- POS merchants are even more committed to card as the standards are integrated into point of sale registers and contactless.. and consumer wallets. Its not about the payment.. its about the experience. Target is by far the most successful retailer with a decoupled debit.. but their success is built upon a 3,000 person internal organization and two bank licenses. All driving a fantastic experience in Target Circle.
- The TOP reason A2A won't grow is that Debit rates are a flat $0.21 +5 bps.. moving to $0.15. We don't need an A2A solution.. we have that already. The challenge is getting consumers to use their debit card vs the credit card.
- Not static. The next phase of card innovation will be around better consumer authentication. To defeat cards, you must not only create a better experience than V/MA but also invest more than the combined efforts of all of their stakeholders. Think about merchandise returns. A merchant must have a consistent internal process for managing these. Adding a payment method creates multiple internal projects to manage it. There is a big upfront costs to a new payment method.. and processors won't manage it for free.
- Take a look at PIX in Brazil or India UPI. Card volumes in these "un carded" markets have gone UP over 40%. A rising tide lifts all boats..
- A2A and RTP schemes will find traction, but it certainly is not in core consumer payments.. but rather things like recurring payments.
Dave, I disagree for US and certainly for ROW. Here are my counterpoints
- The "Cost" of payments is not uniform. Large merchants have managed debit down to $0.06 and credit to ~50bps. The fee growth you outline includes all value added services (VAS). As more transactions move to eCom (ex buying groceries online) more eCom services get used. US card fraud rates are trending downward significantly.
- The top 20 eCom merchants I speak with have made significant investment in managing fraud. Its all built around card. A2A is like taking a check. Merchants have no desire to grow their collections team.. a unit they just shut down 5 yrs ago.
- POS merchants are even more committed to card as the standards are integrated into point of sale registers and contactless.. and consumer wallets. Its not about the payment.. its about the experience. Target is by far the most successful retailer with a decoupled debit.. but their success is built upon a 3,000 person internal organization and two bank licenses. All driving a fantastic experience in Target Circle.
- The TOP reason A2A won't grow is that Debit rates are a flat $0.21 +5 bps.. moving to $0.15. We don't need an A2A solution.. we have that already. The challenge is getting consumers to use their debit card vs the credit card.
- Not static. The next phase of card innovation will be around better consumer authentication. To defeat cards, you must not only create a better experience than V/MA but also invest more than the combined efforts of all of their stakeholders. Think about merchandise returns. A merchant must have a consistent internal process for managing these. Adding a payment method creates multiple internal projects to manage it. There is a big upfront costs to a new payment method.. and processors won't manage it for free.
- Take a look at PIX in Brazil or India UPI. Card volumes in these "un carded" markets have gone UP over 40%. A rising tide lifts all boats..
- A2A and RTP schemes will find traction, but it certainly is not in core consumer payments.. but rather things like recurring payments.