The Love-Hate Relationship between Credit Cards and Merchants

8. June 2018.

It is a classic case of “I love you but I hate you” as Walmart’s merchant lobbyist makes an unfriendly statement to the press:

  • “We are not looking to start another fight but if that’s what happens, then that’s what happens.”

Without merchants, the credit card industry has limited transaction throughput; without payment card access, merchants are limited to cash and checks. And, of course, forget about scalable e-Commerce.

  • “All players in the payments ecosystem – including retailers – have the opportunity to provide feedback and participate in the process,” said Jeff Tassey, chairman of Electronic Payments Coalition, whose members include networks like Visa and banks like JPMorgan Chase & Co.

  • “While some industries lobbying Washington for further regulation seem to be more interested in cutting their own costs than protecting their customers from fraud, the payments industry is fully committed to providing security and innovation for all participants,” Mr Tassey said.

There is friction in the US market, and the issue has been boiling for almost half a century. The Australian market saw promises of interchange savings being passed onto consumers, but as experienced in the US with debit card interchange price controls, these never materialized.

For now, the friction will continue. Be careful what you ask for. Do you remember the demise of the merchant payment network, originally launched as ISIS? Running a payments business is not as easy as it looks!

Overview by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group

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