Cash remains the most widely used payment system on Earth. In “Markets, not government, should drive cash’s replacement in the American Banker and PaymentsSource I discuss the global commercial and government wars on cash. Commercial payment systems such as Alipay, MasterCard and Visa displace cash by offering consumers and merchants a superior value proposition. In contrast, governments seeking to reduce tax avoidance and crime, improve economic productivity, and/or enable negative interest rates to be an effective policy tool for central banks, use force.
In PaymentsSource discusses the epic and decades-old struggle between merchants and the payments industry over acceptance fees and contends the terms of debate are starting to change from a narrow focus on merchant cost to taking a more holistic view, including cardholders, of payment-system value and costs.
First Data is the world’s largest portfolio of payment processing and network assets. In PaymentsSource argues that First Data has long punched below its weight and that the sum ought to be greater than the parts. In particular, the payments behemoth leveraging its issuer and merchant relationships ought to be able to boost Star’s value proposition, share and economics, and thereby also enhance its issuer and merchant processing businesses.
In the American Banker the estimable Mallory Duncan, general counsel of the NRF, attacked banks for making “monopolistic fees on credit cards” and in the same breath decried reward-rich credit cards consumers love. In the Hill I take Duncan to task and applaud fierce issuer and network competition delivering reward-rich credit cards to consumers, criticize interchange price controls in the US, EU and Australia, and urge the payments industry to make a more aggressive affirmative case for the right to compete, and set interchange to maximize total value.
In the Hill applauds issuer and network competition delivering reward-rich credit cards to consumers, decries interchange price controls in the US, EU and Australia, and urges the payments industry to make a more aggressive affirmative case for the right to compete and set interchange to maximize total value.
The Fed’s benchmark interest rate in real terms has been negative for most of the last decade and a half. The Japanese, Swiss, Danish and Swedish central banks’ benchmark rates in nominal term are negative. Interest rates are the economy’s most important price. In the American Banker I discuss the folly of negative and artificially-low interest rates.
Retail payment networks with critical mass such as MasterCard and Visa enjoy powerful network effects. In ” Look Who’s Going for Network Effects” in the March issue of Digital Transactions I discuss merchant processors’ efforts to build two-sided platforms with network effects.
In the Hill I point out Ant Financial’s pending acquisition of MoneyGram -the second-largest money-transfer network in the U.S., is a forceful reminder that while the U.S. is wide-open for China’s payments dragons, the Inner Kingdom remains closed to American payment networks such as Visa, MasterCard, American Express and Discover, notwithstanding China’s 2001 WTO commitment to open up its domestic credit-and-debit card market.
In the American Banker I argue paramount for gutting the Dodd-Frank Act is how Republicans frame the issue. President Trump must use his bully pulpit to make the case to the American people that it’s a jobs-and-business killer, and thereby create conditions where Senate Democrats – particularly those facing tough 2018 elections – are compelled to support dismantling it, spurring job and wealth creation.
Trump’s chief trade negotiator and advisers are hawks. In 2001 China made an express WTO commitment to completely open its domestic credit and debit card market by 2006. But China played the Bush and Obama administrations for saps. As of January, 2017 there still hasn’t been a single domestic MasterCard or Visa transaction in the world’s second-largest payments market. In National Review I discuss, and urge the Trump administration with China to first focus on the payments sector.
In the January, 2017 Digital Transactions discusses Trump’s financial regulatory reform agenda and the prospects and implications of gutting the Dodd-Frank Act, including repeal of the Durbin Amendment and reining in the CFPB, ending Operation Choke Point, and curbing regulatory absolutism.
In the American Banker notes China has flagrantly flouted it 2001 WTO commitment to completely open up is domestic credit and debit card market. As of December, 2016 China UnionPay continues to enjoy a protected domestic card monopoly. There has not yet been a single domestic Visa, MasterCard, Amex, Discover or JCB in China. This would be an excellent sector for Trump to retaliate against trade partners not honoring their obligations. There isn’t a more black-and-white case.
In Digital Transactions discusses the challenges harnessing real-time payments between DDAs to support retail payment systems.
In Barron’s I decry an increasingly absolutist administrative state making law and discusses how it is completely at odds with America’s tripartite constitutional system of government.
In the American Banker discusses the GAFAs’ – Google, Apple, Facebook and Amazon – use of and ambitions in payments to enhance their platforms and the potential impact on the payments industry and banks.
In Banking Strategies contrasts the approaches of EU, UK and US regulators have taken encouraging faster interbank payment systems.
In the American Banker discusses global retail payment network competition and protectionism and national network champions.
In the American Banker sounds an alarm over the impact of an administrative state on steroids on the financial services industry.
In the Washington Times decries the impact of unchecked and increasingly outright lawless regulators are having on financial services availability and innovation.
In Digital Transactions discusses the Durbin Amendment imposing interchange price controls, boosting the role of the administrative state and politicizing payments.
In the American Banker discusses regulators’ role spurring faster interbank payments.
In the American Banker makes the case that a GOP win in November is a necessary but not sufficient condition for rolling back or repealing the Dodd-Frank Act, which is a powerful damper on economic growth.
With Trust EU Affairs’ Monica Monaco discusses differences between payments innovation in Europe and the U.S. and regulation’s impact.
In the October, 2015 Digital Transactions contrasts payments innovation in the U.S. and Europe, discusses why the generally less rigid and more flexible US market has produced greater innovation, and worries about heavy-handed regulation’s cost.
In the Washington Times argues that to repeal the Dodd-Frank Act Joe and Sally Sixpack need to come to understand it didn’t address the cause of the financial crisis, that Dodd-Frank is stifling job, wealth and creation and, that vilified banks must make the case for enormous moral good they do.
In BAI Banking Strategies Magazine discusses why nonbanks deliver a disproportionate amount of consequential payments innovation.
In Digital Transactions discusses how the payments Gargantua First Data has changed as a private company, the fumbled Star-network opportunity, the imperative to ramp up international growth and IPO prospects.
In PaymentsSource discusses the mammoth payments processor First Data’s (1) assets: scale, product breadth, and multinational delivery and distribution, (2) lackluster growth, (3) lack of synergies across business lines, and (4) prospects.
In the American Banker argues that mobile payment will not disrupt but rather will enhance the existing payments ecosystem and longer term if uber-digital wallets gain massive share may reallocate economics.
A ripple of excitement coursed through Wall Street and the payments industry on news China will at long last license foreign payment-card networks to compete in its enormous domestic payments market, which grew a sizzling 52% in 2014. In the American Banker discusses why MasterCard, Visa and other foreign networks are unlikely to take meaningful share from the domestic monopolist UnionPay anytime soon.
Discuss the mobile payments land rush, different players’ aspirations and why it matters.
In the American Banker reviews Peter Wallison’s book Hidden in Plain Sight: What Really Caused the World’s Worse Financial Crisis and Why It Could Happen Again. It’s engaging, alarming and a must-read for policy makers, the commentariat and citizens concerned about preventing another financial crisis. Wallison argues persuasively government housing policy created a tsunami of risky mortgages which caused the financial crisis and further that unless and until the false narrative insufficient regulation and greed on Wall Street caused the crisis is debunked, genuine reform will be politically impossible.
In the Washington Times reviews Peter Wallison’s book Hidden in Plain Sight: What Really Caused the World’s Worse Financial Crisis and Why It Could Happen Again. Wallison makes a compelling case government housing policy was the principal cause of the housing and subprime mortgage bubbles and consequent financial crisis and warns Washington is marching down the same path again.
In the American Banker discusses the Fed’s proposal to shepherd the US payments industry to faster interbank payments.
In the January, 2015 issue of Positivity magazine discusses the impact of pan-European interchange price caps on payments innovation and competition, cardholder value and cash use.
In the American Banker argues that the CFPB should be funded by politically-accountable Congress, be supervised by a bipartisan board rather than a single unaccountable director.
In the American Banker urges the payments industry to make an affirmative pro-consumer case for repealing the Durbin Interchange Amendment.
In National Review discusses the movement to have the U.S. Post Office provide financial services to the un and underbanked and contends inevitably it be used to politicize credit and weaken credit standards.
In the January, 2015 Digital Insights discusses the CFPB’s role and the impact of its prepaid rule.
In an interview with POSivity magazine comments on payments in 2015, potential technology, business model and regulatory improvements, changes in acceptance, and challenges for payments providers and merchants.
In Banking Strategies magazine discusses Apple Pay’s prospects and impact on players across the payments value chain, and contends that while Apple embraced the existing payments ecosystem, bank issuers are likely to be the principal losers.
In an interview in Mobile Zeitgeist discusses the state of mobile payments.
In Euractiv decries the European Commission’s proposed rules on dynamic currency conversion as providing a safe harbor for the practice, ensuring travelers using payment cards will continue to be tricked by merchants into paying exorbitant currency-conversion fees at the point of sale.
DCC – Home or Away (*pdf)
In Cards & Payments contends dynamic currency conversion (DCC) fleeces consumers and urges the payments industry require full and meaningful disclosure at the point of sale of the cost of paying in one’s home or the local currency, which in practice would drive a stake into DCC – a service which is deceptive and a horrendous value.
In ISO & Agent Weekly discusses innovation in payments and contrasts the positions and challenges facing much-ballyhooed Square and debt-laden processing Goliath First Data.
In American Banker lambasts dynamic currency conversion as deceptive an a horrendous value and urges the payments industry to curb it and preempt regulation.
The Sorrows of Young Bitcoin (*.pdf)
In Digital Transactions discusses the Bitcoin mania and contends that Bitcoin is unlikely to seriously threaten government fiat money or well-established retail payment and money transfer networks.
In the American Banker discusses the tsunami of innovators challenging and stressing the payments industry and contends they strengthen the system and pose little threat to reigning dominant payment systems.
In Digital Transactions discusses the prospects for and greatest potential threat to increased payments competition, innovation and value over the next decade.
In Euractiv argues Europe would benefit from more dynamism, competition and innovation in payments, and that the European Parliament should reject the European Commission’s proposed retail-payment-network-interchange-price controls, which will supress competition, innovation and consumer value.
In the American Banker chides the editors for gushing over Janet Yellen’s gender, rather than focusing on her troubling dovish policy views.
In the Washington Times discusses why genuine reform of the housing-finance market is so difficult, and urges Congress to get government out of housing finance and to end the Fed’s dual mandate.
In the American Banker applauds Judge Richard Leon’s decision rebuking the Fed for not faithfully implementing the Durbin Amendment, arguing the regulator is the instrument of Congress not policymaker, and that it is Congress’s job not the Fed’s to fix or repeal a bad law.
In the American Banker considers the financial crisis, policy response and increasing systemic risk through the Nassim Taleb’s AntiFragile lens, arguing Washington politicians and regulators are increasing financial-system systemic risk, and that individual financial institutions need to be free to chart their own courses, to prosper, adapt and fail.
In the American Banker contends government policies were the principal cause of the financial crisis and ongoing – indeed increasing financial system risk, and that with the current political landscape breaking up “Too-big-to-fail” financial institutions may be the only meaningful financial-system reform achievable.
Stress Points in Acquiring (*.pdf)
In Digital Transactions using Nassim Taleb’s AntiFragile framework, discusses how an unprecedented wave of new entrants and challengers will stress merchant acquiring and processing, ultimately strengthening the industry.
The Ruling Class (*.pdf)
In Barron’s argues the Dodd-Frank Act converted the US banking industry into a public utility, constipating and politicizing capital allocation and financial services innovation vitial to healthy, sustainable economic growth.
In the American Banker discusses why financial Goliaths supported Dodd-Frank, how regulation provides a moat advantaging them against community banks and would-be challengers and innovators, and why a handful of TBTF financial institutions suits Washington.
In the Washington Times argues that there is basis for the left and right to make common cause ending TBTF financial institutions and doctrine, and restore a modcium of vigor and market discipline to the financial services industry.
In Digital Transactions discusses the longstanding struggle between retailers and the payments industry over interchange fees, the Durbin Interchange Amendment’s impact, and the proposed settlement of the consolidated interchange antitrust suit, and contends the titanic struggle between merchants and the payments industry is unlikely to end anytime soon.
In the Washington Times discusses the danger or the CFPB’s enormous unfettered power and politicization of consumer credit, and argues Congress should rein it in.
In Cards & Payments Insights critiques the European General Court’s rubber-stamping the EC’s ruling MasterCard’s interchange system was illegal and argues consumers would be best served if the EC let payments markets work and primarily played the role of night watchman rather than paternalistic central planner.
In the Las Vegas Review-Journal makes the case that the Obama administration’s policies have systematically suppressed economic growth, prolonging and deepening the economic malaise.
In the American Banker reviews Kevin Mellyn’s Broken Markets, a compelling read discussing the causes of the financial crisis, the perils of financial repression, and the unsustainability of current fiscal and monetary policy.
Why Payments Startups Fail (*.pdf)
In Digital Transactions discusses key success criteria building retail payment systems, the range of payment networks – often well capitalized putative better mouse traps, which failed and why.
In the Las Vegas Review and Journal argues against: (1) proposals for yet more government support for housing, that Washington systematically weakening and politicizing mortgage credit standards and easy Fed credit caused the financial crisis and (2) again extending unemployment insurance, which will only boost unemployment.
In the Deal discusses how to think about valuing Facebook’s high-growth payments business and opportunity, and the enormous challenges of building retail payment networks.
In the American Banker discusses Facebook’s payments business’s sizzling growth, rich fees and prospects, urging management to share more about their payments ambitions.
In the Washington Times argues Fed politicking for government propping up housing is a clarion reminder it’s time to strip the central bank of its dual mandate to pursue price stability and maximum employment, that it’s a license for mischief and price stability is consistent with maximum sustainable job and wealth creation.
In the American Banker discusses the trend of regulators worldwide to treat retail payment networks, such as MasterCard and Visa, as public utilities, and to try to protect and nurture national champions. Contends consumers, merchants and payments innovation are best served by vigorous network competition rather than the public-utility model.
In Digital Transactions discusses the Fed’s implementation of the Durbin Interchange Amendment, and why merchants have a reasonable argument and suit the Fed did not faithfully implement the law’s intent, and contends regulators flouting bad law is more dangerous than bad law.
Washington lends on politics and ideology. In Barron’s argues free markets rather than government should decide how capital is invested across a broad swath of sectors including housing, energy, education and small business.
Hope Ahead for Curbing the CFPB (*.pdf)
In the American Banker decries the danger of a politically unchecked CFPB lording over consumer financial services and discusses the prospects for circumscribing its enormous powers.
In the Washington Times discusses the vital role failure plays in the economy and contends government shielding individuals and firms from the consequences of bad decisions impedes economy recovery and makes society poorer.
In the American Banker comments on the Fed’s implementation of the Durbin Interchange Amendment, arguing in trying to mitigate the legislation’s harmful effects on banks that the Fed ignored the law’s clear intent.
In the American Banker challenges American Banker editor Andy Sobel’s urging banks to forego innovation and instead act like utilities.
In the Washington Times discusses why the Durbin Interchange Amendment causes higher debit card fees and a weaker debit value proposition for consumers.
In the American Banker discusses the Fed’s benign (toward issuers and payment networks) final rule implementing the Durbin Interchange Amendment and urges the payments industry to work in the political arena to gut the legislation in the next Congress.
In Digital Transactions discusses how and why a variety of players traditionally competing in clearly defined stages in the payments value chain are vertically integrating and why it matters.
In the American Banker discusses under what circumstances the Durbin Interchange Amendment’s interchange price cap exemption for small banks would be effective and why under a full-throated implementation (Fed’s alternative B) of the ban on debit network exclusivity and merchant-routing-choice rules it wouldn’t.
In the American Banker contends that section 1075 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (aka the Durbin Interchange Amendment) was intended to encompass alternative payment systems such as PayPal.
In the Washington Times decries the Dodd-Frank Wall Stret Reform and Consumer Protection Act’s enshrining too-big-to-fail, further politiicization of the Fed, and imposition of a huge regulatory burden on the consumer financial services sector, while not addressing the causes of the financial crisis. Urges Congress to dismantle Dodd-Frank Act, starting by repealing the Durbin Interchange Amendment and curbing the Consumer Financial Protection Bureau.
Turn the Interchange Game Around (*.pdf)
In the American Banker comments on Visa CEO Joe Saunders’s decrying the government fixing debit-interchange prices, the unintended consequences for consumers and merchants, and the politics and how merchants wrong-footed the payments industry in the political arena.
Washington’s Assault on Payments (*.pdf)
In Digital Transactions surveys and comments on Washington’s full-throated legislative and regulatory assault on the payments industry.
The rule of law is more important than the consequences of any particular piece of bad legislation. In the American Banker argues the Fed must follow Congress’s intent and implement section 1075 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (aka the Durbin Interchange Amendment) as written.
In the American Banker makes the case narrowing the Fed’s mission to maintaining price stability and a sound dollar are vital to America’s and the world’s economic health.
In the American Banker explains why card issuers’ loss of debit and prepay interchange mandated by section 1075 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (aka the Durbin interchange amendment) is likely to be five or sixfold greater than the $2 billion suggested by an American Banker report.
In the American Banker contends the Dodd-Frank Wall Street Reform and Consumer Protection Act doesn’t address the root causes of the financial crisis, while imposing an enormous regulatory burden on the financial services industry and politicizing credit.
In the Washington Times contends that the “Restoring American Financial Stability Act” and the “Wall Street Reform and Consumer Protection Act” – the financial regulatory overhaul bills, do little to nothing the prevent the next financial crisis.
In Digital Transactions discusses MasterCard’s and Visa’s businesses, the payment network competitive landscape, and their principal opportunities and threats.
In the American Banker discusses China’s making a mockery of its WTO commitment to open up it card payments market and urges the US to bring a WTO action.
Reckless trade policy (*.pdf)
In the Washington Times discusses China’s flouting its WTO commitments, particularly to open up its domestic credit and debit card markets.
In the American Banker criticizes Congress’s proposal to impose a national usury limit and penalty fee caps on the credit card industry.
In the Deal Magazine discusses challenges facing KKR’s enormous First Data LBO.
In Cards & Payments magazine discusses First Data’s LBO, challenges and prospects.
In the Deal Magazine discusses Brazil’s burgeoning electronic payments market, Redecard’s and VisaNet’s monopolies, and how competition will come to merchant acquiring and processing, and what it portends for pricing, acceptance and use.
In the American Banker discusses the long-simmering controversy over interchange and card acceptance fees, the merchant lobby’s campaign for government intervention, how the issue’s been framed in the political arena, and why it’s coming to a head.
Credit Cards in the Crosshairs (*.pdf)
In National Review Online criticizes Washington’s crusade against the vibrant credit-card industry and describes why greater government control and the politicization of credit cards will put a damper on innovation and delivery of revolving credit – particularly to those in greatest need.
In the American Banker lambasts a range of proposed credit-card restrictions including Chris Dodd’s recommendation to ban Americans between 18 and 21 from being able to have a credit card without their parent or a guardian signing and their taking a financial literacy course.
The Best Is Yet To Come (*.pdf)
In Digital Transactions says the recession presents Visa and MasterCard with a wide range of opportunities that their relatively new status as publicly held companies frees them up to seize.
Decoupled debit’s promise (*.pdf)
In Cards & Payments magazine discusses the potentially game-changing nature of “decoupled debit.”
Keep government out of lending (*.pdf)
In the American Banker contends that government caused the current credit crisis and that further politicization of consumer credit markets is not the answer.
At Euractiv.com argues that fostering more card-payment network competition rather than treating the networks as public utilities is the answer for what ails Europe’s retail payments market.
Enter the Pricing Mandarins (*.pdf)
In Digital Transactions discusses Congress’s proposal to control payment card acceptance fees and the damage it would cause in the world’s most competitive and innovative payments market.
John Conyers’ wallets (*.pdf)
In the Washington Times discusses Chairman John Conyers “Credit Card Fair Fee Act of 2008” and the harm it would do to consumers, merchants and the payments industry.
In the American Banker criticizes the “Credit Card Fair Fee Act of 2008,” which would convert the US card payment industry into a regulated public utility.
A tale of two IPOs (*.pdf)
In the Daily Deal compares Visa and MasterCard and factors influencing their relative valuations.
In Digital Transactions discusses the importance of interchange to the global card payment networks’ businesses, increasing regulatory and legal assaults on the practice, and the implications of a world without interchange.
In Lafferty Councils Insider argues that insufficient card payment networks competition caused by bank control, a lack of profit seeking, and a hostile regulatory climate is what ails Europe’s consumer payment markets.
Valuing Visa (*.pdf)
In the Daily Deal discusses how Visa will be valued and the imperative for the global payment network to differentiate itself from MasterCard before the IPO.
In the American Banker urges the card payment networks to make a more aggressive, affirmative case in the public and political arena.
In Euractiv.com comments on the effects of EU and national regulators intervention in the card payment network markets.
In the American Banker describes how Discover can step up its game and a rationale for breaking it up.
Bad credit for charity (*.pdf)
In the Daily Deal describes why MasterCard’s charitable foundation is the epitome of bad corporate governance.
In the American Banker lays out how Visa can benefit from and improve upon MasterCard’s IPO experience.
In Card Technology argues it is a mistake for MasterCard to let bankers retain control in Europe.
Paying Up (*.pdf)
In the Daily Deal comments on First Data’s challenges and opportunity to dominate end-to-end payment processing worldwide.
In the American Banker comments on the US interchange law suits, the rationale for cost-based interchange, and why interchange may rise after MasterCard’s IPO.
In the American Banker compares the merits of MasterCard International’s and Visa USA’s responses to the enormous threat posed by merchant plaintiffs’ suits.
MasterCard IPO Has Big Upside (*.pdf)
In Cards & Payments magazine lays out why post IPO MasterCard can accelerate growth and particular constraints management must address.
In Digital Transactions discusses how by going public, MasterCard is throwing off the fetters of bank control, opening up a previously forbidden array of business opportunities with mobile-phone operators, merchants, insurance companies and others.
In the Deal discusses how much MasterCard will be worth and key factors that will influence its valuation.
In the American Banker urges Visa USA CEO John Coghlan to go public, reducing legal liability risk, providing capital and a public currency to fund growth and incent management, and starting to transform the payment association into an innovative and competitive business.
Missing the Mark (*.pdf)
In Cards & Payments contends that payment networks must differentiate their value propositions and invest in their consumer brands to avoid becoming commodity utilities.
In Cards International discusses the vital importance of a competitive credit bureau infrastructure in enabling robust and innovative consumer finance markets.
Buy American (*.pdf)
In the Daily Deal discusses why for European financial institutions, technology providers and processors, buying assets in America is compelling.
Discusses the increasing legal and regulatory assault on interchange in jurisdictions across the globe and how interchange enables a web of businesses to collaborate and innovate.
In Silicon Valley Business Ink advises European software firms to transplant their front office to the U.S. at the earliest opportunity in order to enhance their prospects of winning globally.
In the American Banker argues than financial institutions, merchants and consumers are better served by the market rather than regulators and courts setting interchange rates and rules.
Gold in the SMB space (*.pdf)
In CRM Magazine discusses why the SMB is more attractive the enterprise and why for firms to come up from the .
The Greatest Risk (*.pdf)
In The Daily Deal contends the current environment presents a compelling window of opportunity for technology businesses to acquire technology, products, additional clients and market presence.
Unshackle the Card Associations (*.pdf)
In Credit Card Management magazine makes the case that demutualizing and broadening the ownership of the bankcard associations MasterCard and Visa would unleash a wave of innovation in electronic payments.
In Silicon Valley Business Ink discusses the opportunity to use consumer credit scores to build and communicate individual reputations and thereby facilitate P2P commerce.
The Demutualization Dilemma (*.pdf)
Contends that a change in the governance of the bankcard associations would bring substantial benefits to consumers, merchants and banks.
In the American Banker discusses how the successful use of information improves consumers’ quality of life and attendant challenges faced by, and opportunities for, businesses in acquiring consumer data.