Any new rival to Visa and Mastercard should seriously consider ditching the card concept altogether and utilising customer's mobile phones. A solution which didn't require the current EFTPOS system might save a few costs as well. I would be thinking about
an transaction system which sits above using the mobile network and internet to process the transactions and possibly directly from bank to bank in real time.
Works equally well for debit or credit accounts. Time to clear approximately 10 seconds.
A trusted third party which has no customer or merchant personal or account data facilitates the transactions. No account, name, or identifiable data transmitted anywhere. Integrate it easily into transport, parking and more.
For the bank to bank clearance you can use any network such as a SEPA type network.
It's possible to use the EFTPOS network for the merchant link but any standard internet connection to a (secure) web page or server as there is not any need to encrypt the merchant to bank transmissions, although you would because it's easy.
No card fraud, no ID theft, reduces losses for merchants and cuts costs and clearance time for banks. No cards or readers required - just any mobile phone. Of course it's safe if the mobile is stolen.
Merchants are authenticated to customers, customers to merchants, merchants to banks all in the one process.
Smaller merchants and cafe's, restaurants etc could do their transactions on mobile pda's.
In relation to getting it past the regulatory authorities:
Neelie Kroes, the European Commissioner for Competition Policy, could hardly have put it better in her speech announcing the ruling:
"It is not sufficient that a MIF [multilateral interchange fee] simply increases the sales volumes of a [credit card network] scheme to the sole benefit of the member banks. Rather, a MIF should contribute to objective efficiencies such as to promote more
efficient payment means to the detriment of less efficient ones. Also, the proceeds from a MIF should not just increase bank's revenues – they should be clearly dedicated to the achievement of efficiencies."
ECC Press release
"Multilateral interchange fee agreements such as MasterCard's inflate the cost of card acceptance by retailers. Consumers foot the bill, as they risk paying twice for payment cards: once through annual fees to their bank and a second time through inflated
retail prices paid not only by card users but also by customers paying cash. The Commission will accept these fees only where they are clearly fostering innovation to the benefit of all users."
Because there is no card it might be possible to have no annual card account fees.
It might be attractive to regulators especially with integrated ID.
The best part is that it's really easy, safe and private for the customers and the participants need no new infrastructure.
Now that's what I call competitive efficiency.
Food for thought!