Will Transaction Fees in Retail Payments Go Extinct?

 

The majority of the world’s 2.8 billion credit cards are issued by just four powerhouses, and within that, it’s really a fight among the top two: Visa and Mastercard. According to ShiftProcessing.com, over half the credit card market share belongs to Visa alone, considering it has 335 million cards in circulation.

It’s no surprise then that consumers and financial professionals alike were caught by surprise in November, when Amazon announced it is no longer accepting Visa cards in the UK, supposedly as the result of a rising “interchange” fee in a post-Brexit Europe. Merchants forked over $110 billion in credit card processing fees in 2020, and not only are these normalized fees a cost burden for ecommerce marketplaces and small businesses that rely on easy and low-cost online sales, but their utility and acceptance are being questioned with the rise of fintech innovations, alternative payment methods, and more.

If Amazon’s distancing from Visa sticks, and with options like “buy now, pay later,” direct-to-bank transfers, and even artificial capital like crypto for payment, will the mega credit card companies’ duopoly be disrupted by alternative payment methods? David Shipper, a Strategic Advisor in Aite-Novarica’s Retail Banking & Payments group, says it’s likely the payment ecosystem expands, but the credit card giants shouldn’t be too worried.

Hamed Abbasi, Co-Founder & CEO of accounts payable and receivable software company Plooto, agrees; credit cards aren’t going away, or really even phasing out. But different markets show different adoption rates, and could lead to alternative payments finding their stride outside of the U.S.

More Stories Like This:

How Will Sustainability Go Together with the “On-Demand” Economy?

Toy Supply Chain Keeps Retailers Out in the Cold This Christmas

Follow us on social media for the latest updates in B2B!

Latest

Public Libraries are Protecting Against Censorship and Introducing E-Sports
January 27, 2023

Within the last six to eight years, what qualifies as fact-based information has been challenged by several political groups and debates. Advocacy for censorship has been on the rise; this is especially true for young adult books involving LGBTQ+ themes and books centering around people of color. While censorship demands were predominately held in […]

Read More
SmartSky Receives Supplemental Type Certificate for Dassault Falcon 900 Aircraft
January 27, 2023

Research Triangle, NC – January 17, 2023 – SmartSky Networks, the leading provider of inflight air-to-ground (ATG) connectivity for business aviation, today announced the completion of an STC for the installation of SmartSky’s flagship hardware system on the Dassault Falcon 900 series aircraft. The Falcon 900 series, with more than 400 aircraft in service, joins a […]

Read More
Let’s Talk About AV as a Service
January 27, 2023

— AVaaS, or AV as a Service, is the future of the audio visual industry. However, the conversation around this shift has been an awkward one, and it’s time to call out the elephant in the room. The industry has largely excluded the end user and buyer communities from this conversation, but it’s important […]

Read More