My favourite sites: Outflanking Mastercard and Visa

In business, as war, to attack it rarely gives a powerful and well entrenched anti-head. A successful attack is more likely to come from an unexpected, and less well defended, direction, or a source that a threat is considered as not very long.

MasterCard and VISA payment processing industry long has been entrenched powers. Consumers 'pockets and merchants' card machines with a firm grip, two mass market card brands has grown rapidly in their hundreds of billions of dollars every year total as intermediaries in transactions taking. American Express at the top end of the market out a little piece of ground is at stake, but despite decades of deep-pocketed support from parents, Discover Financial Group's rival network resources barely made a dent, though it usually offers a better deal.

But AT & T and Verizon Wireless Inc. can assist potential allies Discover MasterCard, Visa as breaking through the Maginot Line has emerged. Two wireless providers have a plan that U.S. consumers to pay using their mobile phones will be allowed to work are (1) T-Mobile also reportedly shows and wants to work with Barclays PLC ..

Pay for mobile phone use is not a new concept. A recent study by Gartner Research estimates that more than 108 million people worldwide will use mobile payments this year. However, until now, has been limited interest in the U.S.. Developing world, where many people bank accounts or credit cards, mobile payments easy cash to consumers who already trust in the U.S. (2). Are drawn in the absence, however, interested in offering mobile payment companies must contend with powerful credit card industry.

Plastic as this country has supplanted paper, credit card companies have reaped the profits. According to the Nilson Report, as Bloomberg, quoted by card and electronic payment now more than half of U.S. consumers to purchase is made. In 2003, 36 percent of purchases were paid for this. As a result of all the swiping, Visa sixfold 2005 annual operating income has grown since the last financial year is $ 3.54 billion. MasterCard's annual take has increased more than fivefold to $ 2.27 billion.

Benefit most traders, who in order to pay companies to process payments must come directly from using the services. Our small business, for example, a standard 2.5 percent around the time we accept payment by Visa or MasterCard's "discount" fee does. We also "exchange" fee, which can be 2 to 3 percent of corporate cards, rewards cards and international cards to pay.

Our business is a big burden for all card companies. We transactions, each with a high dollar value are a very small amount. We also have a chargeback or fraudulent claims was 18 years. Businesses that card companies can not offer these benefits to even more than we pay.

Companies generally higher prices as consumers pass these costs. But consumers happily away without realizing that they swipe are indirectly paying for the privilege.

With less competition, fee spread remains largely unchecked. Technological innovations that put an end, but may be new ways of mobile phones as payment processing companies and others to challenge today's titans allow.

AT & T and Verizon are successful, more companies entering the market might be tempted to payment processing. For online transactions, Paypal for credit cards has long provided an alternative, but it is currently a non-factor in the offline world. Payment in the business of other new players can jump in enthusiastic the bricks and mortar. Google, big vendors like Microsoft and Apple markets its payment system for small businesses can be. Intuit, Quicken and QuickBooks manufacturer, is another potential player.

As more companies get into business, should be driven down processing fees for merchants. Cost to hold the line on retail prices so consumers can share in good fortune will allow.

However, this all possible innovation must past the first regulators. In May, 2010, Boston Federal Reserve Bank, three economists how a policy to encourage the development of mobile payment to give some tips on how papers are issued.

"Potential market participants and prevents confusion about how such institutions can be customer relations or shared ownership on the owner a chance intensifies" the author said that uncertainty over the rules. They went on to suggest that "the Federal Reserve organized a group of regulatory agencies for widespread adoption of mobile payments in advance of plans to potential regulatory changes introduced by legislators and the administration to raise this issue with Can. "

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Wednesday, April 27, 2011

Outflanking Mastercard and Visa

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