Community

I have a theory about all existing digital payments: 

Consumer Benefit + Merchant Benefit = Constant. 

There's no doubt that credit cards have dominated the field for decades despite numerous threats from alternative payment rails (e.g. Career Billing). That suggests that credit card has struck the best tradeoff between consumer benefit and merchant benefit.

For that to change requires a new method of payment that increases benefits to both consumers and merchants without taking away from one and distributing to the other.

A truly disruptive MOP would be one that delivers (say) 2X Rewards and charges only 0.5X MDR as the V / MC duopoly. While it might not make a profit, there's no shortage of VC funding for disruptive products that make losses for ages. I've always wondered why there hasn't been such a disruptive payment method in a long time.

In the early days of PayPal, people could charge their PayPal payments to their credit card on file without incurring any fees, with VC funding enabling PayPal to eat the 2-3% MDR levied by the card issuer.

8 years ago, I wrote in Why I Think EBA Clearing's myBank Will Be A Hit, "By using SEPA / PE-ACH rails, myBank shouldn't cost merchants any more than credit / debit card fees. Therefore, merchant acceptance of myBank should be a cinch."

I haven't heard much about myBank since then.

ECB has been trying for a long time to break the V/MC duopoly. It should carry out some serious introspection about why its persistent attempts have met with failure instead of using its bully pulpit to make yet another grandiose prediction.

If AI / ML suffers from the same, good-old GIGO problem that has plagued BI, DW, DM, OLTP and other technologies that preceded it, how transformative / revolutionary / disruptive is AI / ML really? I've always wondered, why can't AI / ML drink some of its own learning and intelligence Kool-Aid and work with non-pristine data quality?

@MelvinHaskins +1, in many other countries including India, Germany, etc. I have never ever received salary in cheque. 

Doesn't Canada have electronic fund transfer methods like NEFT (India) / FPS (UK) that enable an employer to transfer salary payments directly to employees' bank accounts electronically? If not, then Canada should set one up. If yes, it should use it instead of cheque. Either way, prepaid card seems to be a highly contrived choice, except for unbanked people (who also should get banked on priority instead of spreading prepaid). 

When I raised this subject a few months ago on the pages of Finextra, someone pointed out that all TPPs with whom banks share customer data under Open Banking are thoroughly vetted by the regulator, so there's virtually no scope of identity theft / fraud. I'm somewhat perplexed to hear the opposite perspective. 

In ERP, it's not rare to link a company's losses to system breakdowns but I don't recall a bank ever publicly claiming that its losses were caused by problems with its core banking system.

Blog posts like this have been written for almost a decade and still payment cards still rule cashless payments.

As WSJ says in a recent article, "Despite a bewildering proliferation of digital payments over the past 10 years, the old payment champions Visa & MasterCard continue to be the new payment champions because most "new ways to pay for things still lead back to Visa and Mastercard". The share of credit & debit cards in US retail payments is rising, from 53% in 2012 to 62% in 2017 to 70% in 2022, whereas the share of digital payments bypassing card rails has remained flat at 14%."

Even if Face or Voice is used as the second factor for 2FA, PFM access would get disabled. My comment remains. 

I have no inside track into Curve but, going by a sleight of hand followed by PayTM, I'm guessing Curve becomes Merchant on Account, funds itself, then sends that money along with Visa / MasterCard creds to Merchant who only accepts V / MC cards. At least that's how I interpret the following line on Curve's website: "In order to use your Amex with Curve you need to top-up your Amex wallet."

What will happen to third-party PFM apps like Money Dashboard if the culprit banks implement 2FA via, say, Mobile OTP? Will the PFM app still work? If it stops working, will consumer advocates praise the said banks for improving security for implementing 2FA? Or will they diss them for being anti-competitive by blocking access to the PFM, the way AmEx is getting panned for blocking access to Curve?