PayPal Technology May Overtake Visa, MasterCard - Other News

ADVERTISING DISCLOSURE

ADVERTISING DISCLOSURE:
Credit-Land.com is an independent, advertising-supported web site. Credit-Land.com receives compensation from most credit card issuers whose offers appear on our site. Compensation from our advertising partners impacts how and where their products appear on our site, including, for example, the order in which they may appear within review lists. Credit-Land.com has not reviewed all available credit card offers in the marketplace.

Credit Card Applications » News » Other » PayPal Technology May Overtake Visa, MasterCard

PayPal Technology May Overtake Visa, MasterCard

PayPal Technology May Overtake Visa, MasterCard

Consumer payment networks MasterCard and Visa intend to levy the highest allowable debit card fees onto merchants for small purchases. The fee per small transaction will be increased from 8 cents to 23 cents and both companies will waive the “interchange” portion of the fee, claims Thomas McCrohan, an analyst for Janney Capital Markets, according to Bloomberg.

McCrohan went on to say that drastic fee hike will “kill the economics for small ticket debit purchases and influence a shift back to credit cards,” and that the spike in small debit card transaction fees “will almost certainly lead to a merchant revolt against the card networks,” as reported by the Washington Post.

“This pricing change demonstrates the risk to small ticket merchants that accept debit cards,” McCrohan said.

And big ticket merchants as well, such as coffee chains like Starbucks, wherein the vast majority of day-to-day transactions are small purchases.

“These operators will be violently opposed to this price change,” said McCrohan. He surmised that the fee increases could very well cause some companies to stall making investments in the new technology required in order for them to begin to be able to allow customers to pay via new mobile payments systems as a response. The fees also have the potential to “reinforce merchants’ view that the networks are not friends of merchants,” reveals the Washington Post.

Here are the suggestions that the Washington Post claims McCrohan offered by way of explanation for why the card networks might hike the fees:

  • to help the banks that issue cards bearing their logos recoup lost revenue that will result from the regulation limiting debit card fees.
  • to push merchants to accept mobile payments and consumers toward using new technology known as mobile wallets, which aim to make it possible to use cell phones like cards by tapping their phones on wireless-capable payment terminals, instead of swiping a card.
  • in response to a longstanding merchant lawsuit over the fees they are charged for processing payments, which McCrohan said is rumored to be near a settlement.

It is likely that the McCrohan’s first suggestion, banks’ effort to recoup some of the estimated $8 billion in lost revenue due to the Durbin Amendment, is the main influence.

“MasterCard recently informed our issuers that we will implement a two-tiered interchange structure,” James Issokson, a spokesman at MasterCard, said in an e-mailed statement, according to Bloomberg. “As we have noted throughout this process, setting price caps will — and has — created distortions in the market.”

As of yet, there has been no comment from Visa on the matter of the small transaction debit cards fee increase.

Disclaimer: This editorial content is not provided or commissioned by the credit card issuer(s). Opinions expressed here are the author's alone, not those of the credit card issuer(s), and have not been reviewed, approved or otherwise endorsed by the credit card issuer(s). Reasonable efforts are made to present accurate information, however all information is presented without warranty. Consult a card's issuing bank for the terms & conditions.
All rates and fees, and other terms and conditions of the products mentioned in this article/post are actual as of the last update date but are subject to change. See the current products' Terms & Conditions on the issuing banks' websites.
Add to Favorites:

Related News:

Identity Fraud is Up

Posted: February 22, 2018

Last year identity fraud hit a record high, according to the 2018 Identity Fraud Study released by Javelin Strategy & Research. This brings the total number of identity fraud victims in the U.S. to 16.7 million, representing an 8% upswing. ... Continue reading
Traveling More and Taking Shorter Trips in 2018

Posted: February 21, 2018

Heading out for a quick getaway or extended trip to de-stress is trending with travelers, according to Visa's Global Travel Intentions (GTI) Study. They also discovered that taking shorter trips and traveling more often is in the cards for ... Continue reading
Travel and Dinning Out is Trending on Valentine’s Day

Posted: February 15, 2018

If you are planning to take your lover out for a night on the town or on a whirlwind trip for Valentine's Day, you are not alone. According to the new MasterCard Love Index findings, this type of emotion fueled spending is outpacing other ... Continue reading
Get the latest news, articles and expert advice delivered to your inbox. It's FREE.
We'll match all the Miles you've earned at the end of your first year. For example, if you earn 30,000 Miles, you get 60,000 Miles.
For Excellent, Good Credit
Earn 5% cash back at different places each quarter like gas stations, grocery stores, restaurants, Amazon.com, or wholesale clubs up to the quarterly maximum each time you activate.
For Excellent, Good Credit
Our application is quick and easy with instant pre-qualification available
For Fair / Good Credit