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

Pathr.ai Announces Partnership with The Lionesque Group and MG2 to Deliver Pop-Up Shop Analytics for Retailers - Unveiling at National Retail Federation’s Big Show 2022
Pathr.ai Announces Partnership with The Lionesque Group and MG2 to Deliver Pop-Up Shop Analytics for Retailers – Unveiling at National Retail Federation’s Big Show 2022
January 16, 2022
NRF Jacob K. Javits Convention Center, NYC, Booth #948  – January 16, 2022 – Pathr.ai, the industry's first and only Artificial Intelligence (AI) powered Spatial Intelligence platform, announced today it has Read more
NRF 2022 Retail's Big Show
What’s in the Shopping Cart for the 2022 National Retail Federation’s Big Show?
January 14, 2022
 In just a few short days, from January 16th through the 18th, the National Retail Federation will launch Retail’s Big Show in the shopping capital of the world, New York City. As retail Read more
Schools Struggle to Reach Their Education Technology Goals. Here’s Why and How To Fix It.
January 14, 2022
As we hit the two-year mark of the COVID-19 pandemic, the education sector continues to struggle in adjusting to virtual and hybrid education at scale. In 2020, McKinsey estimated that, due to COVID Read more