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American Express buys Revolution Money: The Winners Are...

November 28, 2009

Analysis of:American Express to Acquire Revolution Money | www.paymentsnews.com

American Express’ acquisition of Revolution Money perplexed almost every knowledgeable expert in the industry. A large price tag for few identifiable assets. Outside pressure to “do something” in the growing debit and alternative payment space was significant, and is reminiscent of Amex’s distribution envy in the 1990s. Expect Amex to have substantial challenges integrating this “state of the art” platform. The clear winners: Goldman Sachs and the Revolution founders.

GAO Interchange Report: Reducing Rates will “Pose Challenges”

November 20, 2009

Analysis of:Reducing Interchange Would ‘Pose Challenges,’ the GAO Says | www.digitaltransactions.net

The GAO’s study on interchange was thoughtful, balanced, and light on recommendations. The inconclusive nature of the report reduces the likelihood meaningful legislative action will impact interchange in 2010. However, the combination of DOJ investigations, merchant class action litigation, and continued legislative efforts will collectively put increased pressure on these parties to enact payment system reform. Likely outcome could be a major interchange rate reduction in 2011.

Credit Card Reward Generosity: Declining and Heading South

August 20, 2009

Analysis of:There Goes The Prize: Credit Card Companies Step Up the Swipe Quota For Rewards Programs | www.washingtonpost.com

The generosity of reward programs with many issuers has declined as banks struggle for ways to cut costs. Major banks will trial an assortment of formulas - including a variety of annual fees, reduced flexibility, additional costs to redeem and higher point thresholds. We will also see new and “innovative” use of penalties to deplete rewards balances. Opportunities exist for smaller and non-traditional banks to take share. Expect massive rewards overhaul if interchange legislation passes.

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