The ongoing battle between card schemes and US merchants over interchange fees has escalated, with news that Visa is to sue the nation's largest retailer Wal-Mart over its rejection of a previously negotiated $7.2 billion class action interchange settlement.
As I see the ongoing litigation between US merchants and Card Schemes, I wonder whether this will drive merchants to seek faster adoption of mobile payments technology as an alternative.
Rather than being beholden to Financial Institutions this might just provide a catalyst for the large merchants to drive mobile payments that will effectively exclude the traditional payments players. US banks are already seeing alternatives threatening
their traditional payment revenue streams and are seeking ways to ensure they are part of the new world of mobile payments but the retailers are big enough to make alternate choices.
The sums involved are considerable so this will be interesting to watch it evolve with so much at stake.
Only if they can push whatever the mobile solution charges onto the customer.
Which sort of summarises the ultimate aim of Walmart and others, which is to get rid of their own interchange fees, and push them onto the customer and/or mobile solution providor.
However, if the mobile solution charges are greater than whatever Visa's are (quite likely) then that will make Walmart's goods more expensive. Which Walmart will be very unlikely to accept.
I'm not sure how mobile payment solutions will help merchants at all in this context. For payments at the POS, plastic card is the second cheapest method of payment for merchants (cash being the cheapest). Virtually all current mobile payment solutions use
conventional card network rails and are costlier than plastic cards. If and when a mobile payment comes along that doesn't use card rails, it remains to be seen if it's cheaper than all other incumbent MOPs.
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