20 August 2017
Matt White

Matt White

Matt White - Finextra

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MasterCard and Visa feeling the squeeze?

25 May 2007  |  3510 views  |  0

The threat to the two giants of the card payments industry seems to be growing. Opposition to interchange fees and the emergence of alternatives could shake up the industry.

According to The Economist, the average percentage of each transaction cost taken up by interchange in the US has risen from 1.52% in 2000 to 1.88% in 2006.

And in America the Merchants Payments Coalition continues to fight against collective setting of interchange fees whilst, as Chris Skinner noted, government is taking more than a passing interest.

Meanwhile Finextra recently reported the proposed pan-European debit card scheme being mooted by leading banks unwilling to accept the dominance of MasterCard's Maestro, especially post Sepa.

And GratisCard, backed by AOL founder Steve Case, is entering the fray. This card will use the Internet to transfer data between banks and merchants. As a result, merchants accepting the card only have to pay a processing fee that is capped at 0.5%.

But whilst MasterCard and Visa may not be popular with retailers they have strong relationships with banks and customers. Would savings made by merchants really be passed on to the customer?

So, will GratisCard and others manage to take a significant chunk of the market and will this, along with regulatory pressure, force MasterCard and Visa to alter their stance?

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