#379
How Much Does It Cost To Pay?
Published:
Mar 20, 2021
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With over 3.5b cards issued and $1.1t in transaction volume in Q1 this year alone - Visa, the payment behemoth, has had a busy week vis a vis the regulators.
Earlier this week, the company voiced its commitment to “maintaining stability in our payments system and will not make any future rate changes in the U.S. for another year.” Mastercard matched the gesture, as retailers had been mounting pressure on both networks to delay interchange fee hikes. Legislators themselves were active in raising the heat; particularly Senator Dick Durbin, who’d previously helped limit fees on debit-card transactions, and reappeared in an appeal to the patriotic sentiment of both companies.
Then, on Friday, the WSJ reported that, according to insider sources, the DoJ is investigating whether Visa - and potentially Mastercard - is engaging in anti-competitive practices in the debit card market. The probe allegedly highlights the role of network fees, particularly in their impact to merchants, who in turn raise prices on customers. It is no secret to fintech aficionados that this investigation comes shortly after the blocked acquisition of Plaid, whose innovative tech represented a threat to Visa, according to the SEC. The deal was dropped by both parties in January.
The DoJ apparently also asked about debit-card routing practices in newer forms of payment. This includes using debit cards with mobile wallets like Apple Pay, or when in-store customers pay by tapping debit cards on terminals, rather than inserting. It seems that, while protecting consumers during a prolonged health crisis makes intuitive sense, intervening in the adoption of more innovative tech at scale raises more questions.
The pandemic itself has pushed consumers into unprecedentedly digital settings, greatly impacting the payments landscape. Consider the situation from Plaid’s perspective: it is now worth basically three times what Visa was willing to pay for it…
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How Much Does It Cost To Pay?
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