Community

With all their whining and ranting, merchants have managed to pull wool over the eyes of J6P Consumer, who thinks that merchants are underdogs, and completely misses that, when he pays with debit card or A2A, merchants incur way lower MDR cost but rarely pass it on to him by way of a discount on the sticker price.

Whenever a merchant threatens to surcharge me for paying with credit card, I dump everything at checkout, and scoot - not to another method of payment without surcharge but to another merchant who accepts credit card without surcharge. In 35 years of using credit card as my go-to MOP in many countries, 99% of merchants have called me back and waived their demand for surcharge, and I've easily found another merchant for the remaining 1% of the cases.

Last I checked, Cardlytics claimed that 2000 banks and financial institutions used its platform to make targeted offers to their customers off of their spend data. That didn't stop finsurgents from claiming that Financial Institutions Are Missing Out on Personalisation. Hopefully, the entry of the largest bank in USA will stop them stop them from making such claims going forward.

Why would a consumer with above room temperature IQ switch to FPS / A2A RTP and forfeit rewards, deferred payment and other benefits offered by credit card?

Most of your consumer-side benefits of A2A are contrived e.g. (1) Tap and Go of Contactless Credit Card is way more frictionless and faster than entering password to open screenlock, start A2A app, scan QR, enter PIN, etc. (2) Consumers swipe / dip / tap a credit card instore - they don't enter card details instore. Your  statement "bypassing the need to enter card details" is completely wrong for instore payments. Now, ignoring for the moment that the title of your post says "instore" and taking online payments: Through a combination of Visa Direct, Card on File Tokenization, etc., I have not entered my full credit card details for a vast majority of online credit card payments in over three years, so your statement is wrong for most online payments as well.  

I could go on and on but Pay By Bank payment methods have continued to flop in advanced markets because its PSPs have never answered the question "What's in it for consumers" satisfactorily. Answers like yours only insult their intelligence and further estrange them from A2A RTP. 

BCG calls it Loyalty 2.0. Four years ago, McKinsey called it "Platformication" and advised banks to sell e.g. Flowers. When rideshare, ecommerce and other industries sell BNPL and other financial services products, it's called Embedded Finance. In that spirit, I called this Embedded Shopping when I first came across this three years ago.

Notwithstanding the terminology, I believe banks have been doing this business for long enough time and I wonder if they can garner any incremental revenue from it to offset the drop in the interchange revenue arising out of the latest Visa / MasterCard settlement with merchants. 

IMO, I think the low hanging fruit for banks could be pureplay BNPL, which has way higher MDR than Credit Card. Thus far, the BNPL play of JPMCs and BofAs and Citis has comprised retrofitting installment-based repayments to a normal credit card payment with normal credit card MDR. As a result of this new settlement, they might want to introduce pureplay BNPL products à la Affirm, Klarna, PayPal, fetching higher MDR, as a new source of revenue.

I'm able to click the link and visit the post, not sure what's the problem you're facing, anyway giving below its URL, push comes to shove, you can always copy-paste:

https://www.finextra.com/blogposting/22155/open-banking-eu-v-usa

My linked post explains how USA has achieved runaway success in "Open Banking".

tl;dr: It's not by clicking a button labeled OPEN BANKING - literally or metaphorically. If anything, it's by doing exactly the opposite. 

Unsolicited $0.02 for your follow up posts (or even for editing the present one): Don't baseline Open Banking on EU. It's only a law there. By way of market adoption, markets like USA have trounced EU by a factor of 10.

Open Banking: EU v. USA.

The way ~6000 open finance apps work in USA, customers clearly decide what data they want shared across the open finance ecosystem and NOT by clicking a button labeled OPEN BANKING.

Oracle (Disclosure: Ex employer) and half a dozen other fincumbents have been supplying private banking / private wealth management solutions to banks for 30+ years.

Like it probably postured to disrupt UBS and other traditional private banks and private wealth management businesses with its B2C business model at inception, I'm guessing Onyx Private will posture to disrupt all these fincumbents with its B2B business model now.

Who knows, it might even work: There's a sucker born every minute, as they say; people have short memory;  and disrupting traditional banks and tech companies always has strong product zeitgeist fit.

10 years is probably too long.

There's already ample evidence that "software can be made by people with no technical background, collaborating with an AI."

That includes me: Will ChatGPT Kill Coders?. 

I have two questions: 

1. "allows PSPs to delay the execution of an outbound payment transaction by up to four business days from the time the order". Order means payment instruction from payer or order from, say, HM Treasury to review / reverse the payment?

2. "The liability split 50%/50% between payer and payee". Between payer and payee or between payer bank and payee bank?

On a side note, this move totally confirms my last year's prediction that "Banks will thank regulators for providing the chance to delay payments and earn float income under the pretense that they're "carrying out extra due diligence on the authenticity of the payment"."