MasterCard Plans to Charge Fees on Third-Party Mobile Wallets

MasterCard has announced plans to assess undisclosed fees on “staged” U.S. digital-wallet operators, such as PayPal, Square, Intuit’s Go Payment and Google Wallet, that serve between the card and the user and thus don’t provide the network with sufficient transaction data. They may avoid the fee by taking part in a new registration process that requires them to implement revised data-sharing and transparency rules.

From NFC World, citing MasterCard:

“The digital wallet operator registration program is needed to “ensure the integrity of our brand/network as new ways of working with the network continue to evolve.”

Visa says it will not impose a similar fee.

However, Visa’s CEO, Charlie Scharf, contends assessing fees on staged digital wallets is “totally appropriate to do.”

This is both a market-power and brand play on MasterCard’s part. The lack of transparency often makes it difficult to support credit card rewards tied to meeting certain shopping criteria such as buying groceries to earn extra frequent flier miles during a special promotional period, for example. But MasterCard also is upset because such wallets may not display its brand properly, even though the network’s cards fund a number of their transactions. As such, the digital-wallet operator fee, which takes effect in July, helps to counter the lost benefit of brand exposure as well.

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Tags: Mobile Payments