‘As Long as Visa Suffers’

Ron Shevlin, writing last month for Snarketing 2.0 on CurrentC:

Furthermore, let’s review again the impetus behind the MCX consortium. If merchants simply needed a place to push out more coupons and drive more business, they could have partnered with Google or Apple. But they didn’t. They set up their own payment processing capabilities, because the real impetus here is avoiding interchange fees.

Interchange fees vary greatly, of course, but it’s fair to estimate that, at a transaction level, the fee ranges from 1% to 5% of the transaction value.

That’s why CurrentC doesn’t work with Visa/Mastercard/Amex. The retailers are trying to create a system that cuts the card networks — and their transaction fees — out of the equation. The problem with that is that, as Tim Cook emphasized in the Apple Pay introduction, people like their credit cards. Credit cards are a lucrative business and a highly competitive market.

Retailers want to cut credit cards out of the equation; consumers don’t. For that reason alone, I see CurrentC as doomed.

Shevlin closes with this anecdote:

At last year’s BAI Retail Delivery conference, I hosted a meeting of CMOs from large FIs, which featured Lee Scott, the former CEO of Walmart (who is a member of MCX). I asked Mr. Scott why, in the face of so many failed consortia before it, would MCX succeed?

He said: “I don’t know that it will, and I don’t care. As long as Visa suffers.”

Monday, 27 October 2014