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No Longer Living in a Material World, Credit Cards Breaking Free of Plastic Boundaries

June 17, 2008

Analysis of:Mobile phones to replace credit cards | www.bankingtimes.co.uk

The implication of credit cards being displaced by mobile phones represents one more important change in the payments industry; the shift to a virtualized account.  In the near future, it is likely that consumers will no longer need plastic cards, as transactions will be enabled through any number of different devices that may or may not be grounded in the material world.

Completing the Payment Transaction Circle

June 2, 2008

Analysis of:JP Morgan Chase to bring payment systems back in house | www.cio.co.uk

The announcement that JPMorganChase is bringing their merchant network in-house underlines the increased value of owning both the issuer and merchant side of a payment transaction.  As the spread between issuer income and merchant expense becomes narrower, strategies like those announced by Chase this week and previously, by Bank of America, mean that these giants will have the control and muscle to come out ahead when the smoke clears in the payments market.

What's Old Becomes New Again

May 15, 2008

Analysis of:First Data Gets Major Retail Prepaid Distribution with InComm Deal | www.digitaltransactions.net

With the shake up amongst the largest U.S. credit card issuers over for the time being, it's no wonder that processers like First Data are going to be searching for new ways to leverage their network investments.  First Data built their reputation in part by holding as many pieces of the transaction pie as possible.  Prepaid cards are the logical next market for them to focus on as the companies who emerged a few years ago look for distribution channels and the prepaid market begins to consolidate.

ATM's Wearing the Emporer's New Clothes

March 26, 2008

Analysis of:Are rising credit card interchange fees hurting ATM usage? | www.atmmarketplace.com

ATM’s may think they have on the cutest outfit in town, but merchants and consumers are continuing to chuckle and just move on by.  The convergence of transparency and information are making them much savvier players these days and ATM’s aren’t keeping up.  It’s not just all about interchange, but all about creating relevancy in a world where virtual payments exist.

You Say You Want a Revolution?

March 17, 2008

Analysis of:Interchange act coming back stronger | www.greensheet.com

As payment transactions increasingly move to non-cash based products, the need to create an interchange system in the U.S. that makes sense for all parties will only grow more urgent.  Merchants have made it perfectly clear they will continue their fight to be recognized as participants in the rate-setting process.  Emerging payment providers and networks are also putting pressure on the legacy product providers to create new value propositions.  Investors will demand greater transparency.  Are the dynamics falling into place for a revolution?

Credit Squeeze Release Valves Open Wider

February 28, 2008

Analysis of:Merchant Cash Advances Open Doors | www.greensheet.com

An upswing in the merchant cash advance business is just one of the ways a need for cash in the small business sector is met and banks may be happy right now to let this business slide off their plate.  But with the small business sector continuing to outpace the market in terms of real growth, are they missing a very real revenue opportunity?  Is it time for banks and regulators to create finance vehicles that make sense to everyone in a near-prime market?

Beyond payday loans to a new middle class?

January 28, 2008

Analysis of:Beyond Payday Loans | online.wsj.com

The recent article by Bill Clinton and Arnold Schwarzenegger outlining a new financial services initiative in California should be welcome news to the millions of workers using payday services.  As the traditional middle class is breaking apart and their vulnerabilties have been exposed in the clear light of the sub-prime meltdown, this initiative may be more important than it seems at first blush.  Our ability to create a stable, financial base out of a core working class in the United States could prove to be an important milestone in the sustainability of our economic model. The key elements in the success of the program, howver, will be the willingness of target employers to actively participate in the program through automatic payroll deposit programs, creation of relevant promotional programs that reach the unbanked where they live and work, and a long-term investment in financial education programs designed to create financial stability in this market..

AMEX Charges Posting to Other Card Associations?

January 14, 2008

Analysis of:American Express to Take Big Charge as Loans Sour | online.wsj.com

The announcement this week that AMEX will be taking a significant charge due to rising bad debt may have a backlash affect on the other major card associations.  MasterCard's stock has been performing well, even with a shaky economy, but this announcement has taken a bit of the wind from their sails.  On the other side of the street, Visa is preparing for their much-anticipated IPO and the overall mood on Wall Street may not be as welcoming as it was a few months ago.

AMEX Expanding into the Final Frontier.

January 3, 2008

Analysis of:AmEx Takes a Leaf from Discover’s Acquiring Strategy—with a Twist | www.digitaltransactions.net

The recent announcement that AMEX has entered into an agreement with FDC to offer merchant acquiring services has as much to do with expanding their issuing market as it does with expanding their presence in the downstream merchant market.  In addition, as MasterCard and Visa continue to redefine themselves as public entities and the pressure mounts to address interchange rate structures in the U.S., AMEX needs to create a more level merchant playing field with their primary competitors, but what impact will that have on their pricing structure?

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