PaymentsJournal
SUBSCRIBE
  • Analysts Coverage
  • Truth In Data
  • Podcasts
  • Videos
  • Industry Opinions
  • News
  • Resources
No Result
View All Result
PaymentsJournal
  • Analysts Coverage
  • Truth In Data
  • Podcasts
  • Videos
  • Industry Opinions
  • News
  • Resources
No Result
View All Result
PaymentsJournal
No Result
View All Result

The Interchange Antitrust Settlement: The Peril of “Going Nuclear”

Ken Paterson by Ken Paterson
July 30, 2012
in Uncategorized
0

551520

0
SHARES
0
VIEWS
Share on FacebookShare on TwitterShare on LinkedIn

The proposed Visa/MasterCard Antitrustsettlement (Payment Card Interchange Fee and Merchant DiscountAntitrust Litigation) has been public for over a week now, andthere are lots of nuances to be analyzed (Mercator members shouldsee our July Research Note The Interchange AntitrustSettlement: An Initial Assessment), and even the survival of thesettlement has taken on its own dynamic as merchants considerwhether or not to opt out.

So let me focus on just one element: the ability of merchants tosurcharge consumers for using credit cards, a.k.a. “going nuclear.”In the United States, where consumers have very little experiencewith surcharging (outside of exceptional government and educationalpayments), consumer sensitivity to surcharging could beparticularly strong.

Based on preliminary data from Mercator Advisory Group’s June 2012CustomerMonitor Survey Series survey of 1,000 U.S. consumers, avast majority of consumers owning a general purpose credit cardindicated that they had never had the experience of “Storescharging an extra fee if a credit card is used.” When surchargingwas presented as a hypothetical experience in the survey, resultshighlighted some real downside risks for both merchants andissuers. Over eight out of ten credit cardholders encounteringsurcharging would choose either a different method of payment orwould take their business to another merchant. It is important tonote that in these scenarios, no surcharge amounts were noted, onlythe existence of a surcharge. However, the rather dramatic consumerreactions to the notion of surcharging-both anti-merchant andanti-credit card-are notable considering the surcharge amount wasnot specified.

Market observers seem divided at present regarding the likelihoodthat merchants will actually surcharge. And in the current economicenvironment, the likelihood of surcharging is perhaps lower than itmight be in a seller’s market. I liken surcharging to a strategicweapon; its power can be a strong bargaining chip in negotiations,but in the event it is used, considerable collateral damage to allstakeholders is likely. As the payments stakeholders plan theirstrategies in light of the settlement, let’s hope that the creditcardholders are not ignored. Their reaction to the nuclear optionshould not be underestimated.

Tags: Banking ChannelsCompliance and RegulationDebitFraud Risk and AnalyticsMercator InsightsMerchant AcquiringMobile PaymentsPrepaidSelf Service and ConvenienceSocial Media
0
SHARES
0
VIEWS
Share on FacebookShare on TwitterShare on LinkedIn

    Analyst Coverage, Payments Data, and News Delivered Daily

    Sign up for the PaymentsJournal Newsletter to get exclusive insight and data from Mercator Advisory Group analysts and industry professionals.

    Must Reads

    Why Businesses Need to Adopt Real-Time Payments as a Competitive Differentiator

    Why Businesses Need to Adopt Real-Time Payments as a Competitive Differentiator

    January 27, 2023
    faster payments

    Faster Payments Are Set to Revolutionize Modern Digital Payments

    January 26, 2023
    How AI can Help Manage Payments Risk in 2023

    How AI can Help Manage Payments Risk in 2023

    January 25, 2023
    cross-border payments

    How to Implement Effective and Innovative Cross-Border Payment Strategies

    January 24, 2023
    credit card experiences, digital payments, b2b payments

    Will Consumer-to-Business Payment Trends Drive B2B Global Growth in 2023?

    January 23, 2023
    Faster Payments Faster Identity Verification, connected car, payments

    2023 Predictions: Authentication, Digital Identity, and In-Car Payments

    January 20, 2023
    bank data

    Interconnectivity, Data Sharing, and Security Are Vital for Banks to Thrive

    January 19, 2023
    B2B Payments, cryptocurrency

    Crypto as a Practical Solution to B2B Payments

    January 18, 2023

    • Advertise With Us
    • About Us
    • Terms of Use
    • Privacy Policy
    • Subscribe
    ADVERTISEMENT
    • Analysts Coverage
    • Truth In Data
    • Podcasts
    • Videos
    • Industry Opinions
    • News
    • Resources

    © 2022 PaymentsJournal.com

    • Analysts Coverage
    • Truth In Data
    • Podcasts
    • Industry Opinions
    • Faster Payments
    • News
    • Jobs
    • Events
    No Result
    View All Result

      Register to download the Brighterion eBook - The power of today’s market-ready AI to reduce transaction fraud