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Object reference not set to an instance of an object.

Comments: (2)

Matt Scott
Matt Scott - NewDay - London 21 May, 2015, 08:12Be the first to give this comment the thumbs up 0 likes

An interesting position.  Many have questioned (over the years) why it is that Acquirers have to pay Issuers for the privilege of accepting their card at their merchants EFT-POS/POI’s (surely Acquirers are providing a service to Issuers in the form of acceptance?).  I doubt very much that consumers will benefit from any dent in Issuer Interchange income – and I agree – the pressure on Issuer Revenue models is likely to see an increase in costs disproportional to any potential benefits in cost reduction at the point of sale.

Being an Issuer-Acquirer with significant On-Us traffic is most beneficial in this instance (both from a rich transactional data and an interchange position) – however – it does create obvious internal cross-charge debates between the retrospective business units (and the schemes are always demanding internally processed statistics).


A Finextra member
A Finextra member 21 May, 2015, 12:29Be the first to give this comment the thumbs up 0 likes

I fully accept and agree with your comments, Matt. As you know my original remarks are only part of the fuller picture.

There is a reverse of the model mentioned, which is that there is interchange paid from issuers to acquirers in the case of ATM transactions. To be absolutely accurate interchange, as discussed, should be called fallback interchange, as it is a scheme determined amount applied in the absence of issuers and merchants/acquirers entering into bilateral agreements and set their own rates of interchange. This could be extremely onerous to do and so fallback interchange has devolved into a default situation.

Clearly ‘on us’ processing, typical within the store card market, circumvents the scheme system by routing the transaction to a closed loop alternative. This can occur with or without any bilateral agreement but having one may ease internal cross charging issues.

A complex system altogether and needlessly so in my opinion, but there it is.