PaymentsJournal
No Result
View All Result
SIGN UP
  • Commercial
  • Credit
  • Debit
  • Digital Assets & Crypto
  • Digital Banking
  • Emerging Payments
  • Fraud & Security
  • Merchant
  • Prepaid
PaymentsJournal
  • Commercial
  • Credit
  • Debit
  • Digital Assets & Crypto
  • Digital Banking
  • Emerging Payments
  • Fraud & Security
  • Merchant
  • Prepaid
No Result
View All Result
PaymentsJournal
No Result
View All Result

Will Card Networks Be Forced into Interoperability?

By Josh Einis
June 7, 2023
in Analysts Coverage, Credit
0
0
SHARES
0
VIEWS
Share on FacebookShare on TwitterShare on LinkedIn
card networks WeChat Bolstering Business Brands with Discover® Global Network White Label Credit Cards 

Bolstering Business Brands with Discover® Global Network White Label Credit Cards 

Alternative payment methods are threatening the traditional interchange business model, and as a result, card networks are responding by offering value-added services.

Merchants now have more payment options that could help them lower or avoid interchange fees, which they pay to issuing banks when customers use cards for transactions. This threatens the business model of the exchanges and is forcing them to adapt. Payments Analyst Matthew Gaughan explores the current landscape in his recent Javelin Strategy & Research report, “The Case For Card Networks’ Embrace of Interoperability.”

According to Gaughan, networks will likely move to a modular, service-based model that packages network and value-added solutions (i.e. risk management, identity, or acceptance solutions) into subscriptions. Given the complex web of technology, regulations, and counterparties, merchants and FIs are faced with, he recommends networks build out a transaction orchestration layer.

“An orchestration layer would help networks essentially quarterback the authorization, clearing and settlement of a transaction in a way that provides maximum benefit to merchants and FIs,” Gaughan said.

As payment rails become more commoditized, the networks are competing with fintech companies in certain areas while also collaborating with them in other instances. Value-added services such as inventory management or fraud mitigation will be the new payments arena in which fintechs and legacy networks clash—even as both parties work together on traditional network solutions.

“Fintech companies like Marqeta and Zeta have their own full-service card programs, but still run transactions over card rails like Visa and Mastercard,” Gaughan said. “Expect networks to replicate this ‘frenemy’ strategy as fintechs increasingly come to market with more white-labeled card solutions that further decouple parts of the card experience.” 

By embracing interoperability and working with fintech companies, card networks can expand their business models beyond traditional network solutions. Card networks possess valuable transaction data, and by providing accessible APIs, they enable third-party developers to integrate these proprietary software products into their own applications, significantly broadening the reach of a network’s own solutions.

“Interoperability is the key to success for card networks as more alternative payment methods emerge,” Gaughan said. “In a world characterized by localized rules and regulations, networks’ products need to be easier for their clients’ developers to implement. As such, interoperability must be the ethos of this era of technological modernization.”

Learn more about how card networks’ legacy positions are being challenged by fintechs and other upstarts, and the challenges standing between card networks and greater interoperability with competitors here.

0
SHARES
0
VIEWS
Share on FacebookShare on TwitterShare on LinkedIn
Tags: Card NetworksFintechsInterchangeInteroperabilityMerchantsPayment Networks

    Get the Latest News and Insights Delivered Daily

    Subscribe to the PaymentsJournal Newsletter for exclusive insight and data from Javelin Strategy & Research analysts and industry professionals.

    Must Reads

    Embedded Finance

    Embedded Finance: Bringing Payments Under a Single Umbrella

    July 14, 2025
    Making Real-Time Payments a Reality

    Fulfilling the Promise: Making Real-Time Payments a Reality

    July 10, 2025
    mortgage

    The Rich Benefits of In-House Payment Systems

    July 9, 2025
    digital cards

    Beyond Plastic: Why Digital Cards Are the Future

    July 8, 2025
    What Premium Card Overhauls by Chase and Amex Reveal About the Credit Card Market

    What Premium Card Overhauls by Chase and Amex Reveal About the Credit Card Market

    July 7, 2025
    Rewire Acquires Imagen, Looking at Prepaid Cards for Migrant Workers

    Smells Like Team Spirit: What Makes Cobranded Credit Cards Work

    July 3, 2025
    uk banking outages

    New Continuous Strategies for Battling Account Takeovers

    July 2, 2025
    Fraud Monitoring

    What to Expect When Nacha’s Fraud Monitoring Rules Take Effect

    July 1, 2025

    Linkedin-in X-twitter
    • Commercial
    • Credit
    • Debit
    • Digital Assets & Crypto
    • Digital Banking
    • Commercial
    • Credit
    • Debit
    • Digital Assets & Crypto
    • Digital Banking
    • Emerging Payments
    • Fraud & Security
    • Merchant
    • Prepaid
    • Emerging Payments
    • Fraud & Security
    • Merchant
    • Prepaid
    • About Us
    • Advertise With Us
    • Sign Up for Our Newsletter
    • About Us
    • Advertise With Us
    • Sign Up for Our Newsletter

    ©2024 PaymentsJournal.com |  Terms of Use | Privacy Policy

    • Commercial Payments
    • Credit
    • Debit
    • Digital Assets & Crypto
    • Emerging Payments
    • Fraud & Security
    • Merchant
    • Prepaid
    No Result
    View All Result