In a Worsening Political Climate, Visa and Mastercard Must Fight Back
In the December 5, 2024, RealClear Markets I comment on Chairman of the Senate Judiciary Committee Dick Durbin’s masterfully-choreographed hearing November 19th “Breaking the Visa-Mastercard Duopoly: Bringing Competition and Lower Fees to the Credit Card System.” Durbin put America’s leading credit networks Mastercard and Visa in the dock. He aimed to vilify them and improve his Credit Card Competition Act’s prospects. His hearing accomplished both.
In the December 2024 issue of Digital Transactions, I comment on the CFPB’s long-awaited open-banking rule. Some fear, and some hope, that open banking will relegate banks to backend utilities. Open banking assuredly will enable new competitors and force banks and traditional payment systems to up their game. Neither policymakers nor regulators, however, should try to tilt the playing field.
There’s a Global, National and State Assault on Payments
In the November 22, 2024, RealClear Markets I comment on Illinois’s Interchange Fee Prohibition Act. Illinois is the first state in America to impose price controls on payment networks’ interchange fees. The Prairie State’s Interchange Fee Prohibition Act bans interchange fees on sales tax and gratuities. Two-sided payment networks like Mastercard and Visa use interchange fees to balance participation on both sides of their platforms to maximize total value. Interchange fees fund issuer innovation, fee-free cards and accounts, grace periods, rewards and benefits, and a slew of fintechs and neobanks. Springfield’s price controls will be destructive. They will also be enormously costly for banks, the payments industry, and merchants to comply with. Systems across the payments system will have to be overhauled to capture sales tax and tips, and to treat them differently. In today’s RealClear Markets I discuss the IFPA’s impact and why the payments industry should pull out the stops to have it overturned or repealed by Springfield.
In the October 2024 issue of the Journal or Payments Systems & Strategy I discuss why government should not compete with private sector payment systems.
Illinois’ interchange fee law sets a dangerous precedent
In the October 2, 2024, American Banker, I call out the danger that Illinois’ interchange price controls pose to the global payments industry. Illinois’ Interchange Fee Prohibition Act bans interchange fees on sales tax and gratuities and restricts data use. It will be enormously costly for the payments industry to comply with, introduce manual operations reminiscent of the nineteen seventies, reduce cardholder benefits, and sets the stage for a patchwork of state price controls on payments.
In the September 2024 issue of Digital Transactions, I comment on how the Credit Card Competition Act would impact the credit card industry and discuss whether credit networks in addition to American Express, Discover, Mastercard, and Visa would join the fray. It’s intended to commoditize credit network routing. The bill is unnecessary effort by government to direct a market that works extraordinarily well for consumers, merchants, and banks.
Why Merchants’ Legal Assault on Acceptance Costs Is Anti-Consumer
In the August 16 and 19, 2024 issues of Digital Transactions, I contend what merchants seek from Mastercard and Visa in their antitrust litigation would devastate the networks and harm consumers.”
Cash’s Atlantic Divide: Why Europeans use more cash than Americans do
In the July 9, 2024, National Review, I discuss why Europeans use more cash than Americans. While its use has been falling on both sides of the Atlantic, Europeans use considerably more cash than Americans do. European culture, higher taxes, and lower consumer incentives to use electronic payment systems contribute.
Congress should restore market-driven debit-interchange pricing
In the July 9, 2024, American Banker, I urge Congress to restore market-driven debit-interchange pricing. Micromanaging the terms under which payment networks are willing to process debit-card transactions is bad for both businesses and consumers. Congress has the power to roll back intrusive regulations.
Networks, Merchants, and the Tortured Story of Interchange by Fiat
In the June 2024 issue of Digital Transactions I comment on the landmark settlement of Mastercard’s and Visa’s longstanding antitrust suit over credit-card interchange and network-acceptance rules. Market pricing is preferable to legal settlements, which in turn are preferable to government regulation.
Capital One Lights the Path Away from Interchange Price Controls
In the May 30, 2024, RealClear Markets I comment on Bank of America’s, Chase’s, and Wells Fargo’s opportunity by acquiring debit networks to free themselves of the Dodd-Frank Act’s debit-interchange price controls. Owning their own debit networks would enable America’s largest retail banks to create enormous value for their customers and shareholders.
Capital One’s acquisition of Discover will disrupt Durbin’s straitjacketed debit market
In the May 13, 2024, the Paypers I comment on Capital One’s $35 billion all-stock acquisition of Discover. The combination will increase payment network, debit card, and retail banking competition, and has the potential to massively disrupt Senator Durbin’s straitjacketed debit market. Nevertheless, Senator Elizabeth Warren hyperbolically railed against the deal declaring ‘the merger…threatens our financial stability, reduces competition, and would increase fees and credit costs for American families’. The owners and management of public and private companies should be free to engage in M&A to maximise their businesses’ competitiveness and value unless there is persuasive evidence it would harm consumers. The combination of Capital One and Discover will hugely benefit not harm consumers. The contention a bigger credit and debit card issuer, and retail bank, and payment network, would threaten financial stability is risible. Credit cards and payments businesses have never caused a financial crisis in the US and no credible scenario under which they might have been posited. Hats off to Rich Fairbank.
Congress, not the Fed, is at fault for slashing interchange fees
In a recent piece in the American Banker Americans for Tax Reform’s Director of Financial Policy Bryan Bashur excoriated the Fed for proposing to lower the debit-interchange price cap. In “Congress, not the Fed, is at fault for slashing interchange fees” in the May 9, 2024, American Banker, I note he has the villain wrong. Congress, not the Fed, is the policymaker and culprit. The is Congress’ instrument, charged with implementing debit-interchange price controls mandated by Congress in the Dodd-Frank Act’s Durbin Amendment.
Don’t Take It Anymore! It’s Time for the Payments Industry to Fight Back
Demagogic regulators and politicians pillory payments industry fees as exploitative, as “junk fees,” and “a tax.” In the April 18 and 19, 2024 Digital Transactions I urge the payments industry to make an affirmative case for the enormous value it delivers for consumers, merchants, and banks, and for the freedom to compete and to innovate.
Payment Rails: Public, Private Sector, or Does It Even Matter?
In the April 2024 issue of POSitivity I summarize my March 12, 2024 panel at the Merchant Payment Ecosystem conference in Berlin discussing public and private-sector payment systems.
Capital One’s Bid for Discover Will Lift Many Boats
In the March 25, 2024, Digital Transactions I discuss the impact Capital One’s acquisition of Discover would have on competition in the debit and credit network markets, credit cards, debit cards, and retail banking.
Rigged International Payments Market Is Bad for U.S. – And Bad for Free Trade
In the January 12, 2024 Digital Transactions I discuss increasing protectionism and politicization plaguing the global payment-systems market. Greater competition forces multinational and domestic payment networks to continually up their game, benefiting consumers, merchants, banks, and fintechs, and the economy writ large.
A Regulatory ‘Brezhnev Doctrine’ looms over payments regulation
In the January 11, 2024 American Banker in “A regulatory ‘Brezhnev Doctrine’ looms over payments regulation” I discuss the worldwide regulatory assault on payments industry fees. Governments, by law and regulatory fiat, are imposing price controls on payment networks, treating them as public utilities. The payments industry has bent the knee.
The payments industry should change tack and work vigorously to change the political climate, so it becomes unprofitable for politicians and regulators to impose more restrictive value-destroying regulation and profitable to start rolling back extant price controls.
In the December 2023 issue of Digital Transactions I discuss plummeting valuations across a broad swath of the payments sector.
Worldline is Partly to Blame for Its Stocks Sudden Collapse
In the October 26, 2023 issue of Digital Transactions I comment on the collapse of continental Europe’s largest payment processor Worldline’s stock. Consolidator Worldline has a rich portfolio of merchant acquiring and processing, payment network, and issuer-processing assets, but has failed to realize compelling growth synergies.
The Credit Card Competition Act – What’s Not to Like?
In the October 2023 issue of Digital Transactions I discuss the proposed Credit Card Competition Act of 2023, which is the latest salvo in the forever war on card-acceptance fees. Competition and dynamic prices set in free markets are the optimal way of allocating resources to maximize value. Innovation occurs in lightly, not heavily, regulated sectors. The CCCA would unnecessarily interfere in a highly competitive market that works well and would put a damper on innovation. And, it would advance the line of scrimmage for acceptance-fee foes’ inevitable next assault on the payments industry.
Leave E-Money to the Private Sector
In “Leave E-Money to the Private Sector” in July’s Digital Transactions I discuss the prospects of a Fed digital dollar. A compelling use case for an electronic greenback has not yet been made, much less that if there is one, only Fed, not the private sector, can serve it.
In the March 22, 2023 American Spectator I review William Cohan’s ‘Power Failure: The Rise and Fall of An American Icon.’ He masterfully chronicles the creation, ascent, and destruction of America’s greatest company, General Electric, from its founding in 1892 to the announcement in 2021 of its final dismantlement. It’s riveting. He captures the men who built and shaped GE, including its first president, Charlie Coffin; reformer Ralph Cordiner; the stately Reg Jones; and “Neutron Jack” Welch, arguably its greatest CEO. ‘Power Failure’ is also an epic tragedy of governance failure by a board of directors that neglected its duty to protect shareholders’ interests and police an imperial CEO — the worst in GE’s history, Jeff Immelt.
Silicon Valley Bank’s recent high-profile failure underscores the importance of having a knowledgeable, engaged, and titanium-spined board overseeing management.
Good governance matters enormously. Too many directors are in the words of Warren Buffet “cocker spaniels” enjoying their rich sinecures while shirking their duty to look out for shareholders’ interests.
Central banks shouldn’t be competing with private-sector payment systems
In the February 23, 2023 American Banker I discuss public versus private payment systems. Central banks worldwide, including the Federal Reserve, increasingly are competing with private-sector payment systems like Mastercard and Visa. There’s rarely, however, a payments need that the private sector can’t address, and, in the long term, isn’t better suited to address.
Central banks versus private-sector payment systems – a fair battle?
In the February 13, 2023 issue of The Paypers I discuss problems with central banks competing with private-sector payment systems.
In the February 5, 2023 issue of the American Spectator I review Martin Chorzempa’s The Cashless Revolution: China’s Reinvention of Money and the End of America’s Domination of Finance and Technology.” He masterfully chronicles China’s transformation from a cash-centric, sclerotic, state-dominated financial backwater to a nation with a vibrant, cutting-edge electronic payment and financial system. The title is a bit hyperbolic, as Chorzempa doesn’t make a compelling case that America’s domination of finance, technology, and payments is at risk. He does, however, make a powerful argument for the benefits of competition and light regulation, which can spur and enable innovation in payments and fintech — a lesson American and European policymakers would do well to heed.
In “Time to Reform the CFPB” in the December issue of Digital Transactions I comment on the prospect of reforming the CFPB. It was established in 2011 with near-plenary authority, insulated from congressional and executive accountability, and informed by a distrust of industry, a paternalistic view of consumers, and supreme confidence in the ability of regulatory overlords to do good. The Fifth Circuit’s ruling that the way the agency is funded is unconstitutional opens the door to rewrite its remit and take politics out of its decisions.
Book Review: Marian Tupys and Gale Pooley’s ‘Superabundance’
In the December 1, 2022, RealClear Markets I review Superabundance: The Story of Population Growth, Innovation, and Human Flourishing on an Infinitely Bountiful Planet. Ronald Reagan said, “There are no limits to growth and human progress when men and women are free to follow their dreams.” The Cato Institute’s Marian Tupy and Brigham Young professor Gale Pooley make a cogent, empirically grounded case for Reagan’s full-throated optimism. They persuasively contend that knowledge and more people free and motivate to innovate drive ever-increasing abundance and that if there are limits to growth, they are largely self-imposed.
The Brewing Rivalry for Real-Time Payments
In the October 2022 Digital Transactions I discuss the evolving patchwork of competing and collaborating national and multinational instant-payment systems. Competition and interoperability are the paths to a near future in which most people will be able to exchange money instantly anywhere, anytime.
Visa and Mastercard Would Benefit from More Paranoia
In the August 15, 2022 RealClear Markets I discuss the diverse and unprecedented array of threats confronting the world’s leading payment networks. They must contend with a patchwork of hundreds of traditional “card” networks and alternative payment systems, open banking, real-time interbank payment systems enabling competitors, BNPL systems, digital wallets, the tech giants, increased regulatory threats and payments protectionism planetwide, and the politicization of their businesses.
An Overdue – and Necessary – Cryptocurrency Bloodbath: The party’s over
In the July 14, 2022 American Spectator I comment on the crash in cryptocurrency sector. Cryptomania has been riven by fear, doubt, and economic reality. Investors and entrepreneurs envisioned cryptocurrencies and decentralized finance as the revolution that would upend reigning payment systems like Mastercard, Visa, PayPal, Western Union, Swift, fiat currencies, and traditional financial intermediaries. The seductive narrative was too good to be true. The cryptocurrency sector has been roiled by plummeting prices, runs on deposit-taking lenders, and bankruptcy filings. The crypto bloodbath was overdue.
Steve Forbes, Nathan Lewis, and Elizabeth Ames’s ‘Inflation’
In the June 6, 2022 RealClear Markets I review ‘Inflation: What It Is, Why It’s Bad, and How to Fix It’ by Steve Forbes, Nathan Lewis, and Elizabeth Ames. It’s a timely and accessible discussion of inflation and its perils. They explain the scourge, its causes, and the enormous havoc it wreaks on societies, and they have a silver bullet. While acknowledging nonmonetary inflation caused by changes in supply and demand, taxes, tariffs, and regulation, the authors focus on and are more worried about monetary inflation caused by the devaluation of money. Forbes, Lewis, and Ames’s fix is straightforward, albeit politically fraught. They propose that the Fed’s mandate be narrowed to protecting the dollar’s value. The dollar’s value would be linked to gold. It wouldn’t be a classic gold standard. Rather the Fed would have a target gold price. When gold’s price rose above the target, the Fed would reduce the supply of dollars. When it fell below it, the central bank would increase the money supply.
In the June 3, 2022 Citi Journal I review ‘The Lords of Easy Money: How the Federal Reserve Broke the American Economy’ by journalist Christopher Leonard. It’s a fascinating and alarming read. Leonard warns that the Federal Reserve has become “the central driver of American economic policy making.” He anchors the book around former Kansas City Fed president and FDIC vice chair Thomas Hoenig’s stubborn worry that the Fed’s reign of easy money has increased banks’ risk-taking, fueled asset bubbles, and caused an “allocative effect” that has widened the gap between the asset-owning rich and the poor. If the book has a shortcoming, it’s that Leonard doesn’t suggest a fix.
In the June 1, 2022 American Spectator I comment on the crash of the cryptocurrency market which has plunged 57%, with bitcoin, ether, and XRP down 55%, 60%, and 67%, respectively, since last November, the failure of notionally stable stablecoin TerraUSD, and the promise and challenges of CBDCs and privately-issued stablecoins. Cryptocurrencies have been a bubble fueled by easy money thus far without compelling payments use cases. The case for CBDCs in markets already well-served by electronic payment systems isn’t overwhelming. And, for a robust private stablecoin market to develop, greater regulatory and legal clarity is needed.
Mr. Chopra’s Alternative Universe
In the May issue of Digital Transactions I comment on views CFPB director Rohit Chopra shared with politically simpatico MSNBC. Chopra preposterously contended that the US payment system wasn’t competitive and was behind other countries, suggested interchange was contributing to inflation, and disparaged credit-card penalty fees. While at heart Chopra’s a regulatory absolutist, his mandate is to enforce existing law, not to impose his political preferences on the payments industry.
In the April 26, 2022 American Spectator I review ‘Trillion Dollar Triage: How Jay Powell and the Fed Battled a President and a Pandemic — and Prevented Economic Disaster,’ by the Wall Street Journal’s Chief Economics Correspondent Nick Timiraos. It’s a page-turning paean to Fed Chairman Powell and the central bank, vividly recounting the Fed’s massive intervention in the Covid-19 crisis. It’s also a cautionary tale. As the Fed assumes an ever-greater role in financial markets and the economy, it increases systemic risk and moral hazard.
The Derelict Fed: the Fed is belatedly feeling the heat for the inflation monster it birthed
In the April 20, 2022 American Spectator I discuss how the Fed’s reign of easy money fueled asset bubbles and the highest price inflation in more than forty years. The Fed resisted acknowledging much less addressing surging inflation. Now it’s behind the eight ball. There’s still, however, a chance with monetary tightening that it can engineer a “soft landing,” reining in inflation without triggering a recession.
Mastercard and Visa Bans in Russia Will lead to Substitutes
In the March 15, 2022 RealClear Markets I comment on Mastercard’s and Visa’s bans on Russian cross-border transactions. Financial sanctions are no substitute for sending warplanes.
Should CBDCs Be the Next Big Thing?
In “Should CBDCs Be the Next Big Thing?” in the February 2022 issue of Digital Transactions I discuss central bank digital currencies, the pros and cons of a Fed e-dollar, and competition and the interplay between private and public money and payments. Historically, innovation in money and payments has been driven by private initiative, not the state.
Digital Dollars: A central bank-first approach to digital currency risks crushing innovation
In the August 31, 2021 Citi Journal I argue that a rich ecosystem of regulated private-sector stablecoins would be preferable to a central bank digital currency (CBDC) and further, that the central bank providing a general-purpose CBDC inevitably would inhibit private-sector participation and innovation in money and payments.
Is Inflation Really Transitory?
In the August 17, 2021 National Review I decry the Fed’s groupthink downplaying inflation as “transitory.” The current cocktail of money-printing, massive deficit spending, pandemic-related supply-chain disruptions, and pent-up demand coming out of COVID-19 hibernation means inflation ahead — and not just for the short term.
Congress Should Keep the Fed Out of the Digital Currency Space
In the August 10, 2021 RealClear Markets I contend that regulated commercial banks and partner payment systems or fintechs are better suited to issue and innovate in digital currencies than the Fed. However, they need legal and regulatory certainty. Congress, not the Fed, OCC, and FDIC, should provide it.
Could PayPal’s Latest Fee Boost Make It the Merchant Lobby’s Next Target
In the July 23, 2021 Digital Transactions I comment on PayPal’s just-announced massive price increase. As long as merchants believe PayPal delivers incremental sales it’s price hike is likely to stick. It’s also likely to make it a target of the merchant lobby which has long sought price caps on Mastercard and Visa fees.
Congress Could Scrap Debit Pricing Caps – If It Feels Enough Heat
In the July 8, 2021 Digital Transactions I discuss the Fed’s role implementing Dodd-Frank’s debit-interchange price caps and debit-routing-choice mandate (the Durbin Amendment), banks’ and merchants’ vigorous lobbying the Fed for economic advantage, and the possibility of repeal.
The EU’s Financial Sector Mercantilism Will Lead to Weakness, Not Strength
In the June 24, 2021 National Review I criticize EU mercantilism in the financial sector and argue that Europeans within and without the EU, and Americans, would be better off if the EU pursued more liberal economic policies.
In the June, 2021 issue of Digital Transactions I discuss competition, innovation, and efficiency tradeoffs having more and fewer payment networks, and indulge in a thought experiment considering the impact of splitting the world’s leading payment networks Mastercard and Visa in two.
U.S. debit is already more competitive than most nations
In the April 13, 2021 American Banker and issue of PaymentsSource I comment on the US debit-network market. While it could always be more competitive, the U.S. debit-network market is the world’s most competitive. Global networks Visa and Mastercard give licensees that can give them more payments volume better prices, and use their greater breadth of services, technology, and brands to compete. Competing based on switch fees brand-neutered national debit networks like Fiserv’s Star and FIS’s NYCE have acted like utilities. Consumers, merchants, and banks would benefit from more value-based competitive from the national debit systems.
Weaponizing financial regulation
In the March 27, 2021 Las Vegas Review-Journal I comment on the weaponization of financial regulation to advance policy climate-change crusaders can’t move through Congress. It is however the people’s body Congress’s prerogative to make policy, not regulators’, all the more so when it is economically-destructive policy.
With Digital Currency, Regulators Should Let Markets Pick Winners
In the March 22, 2021 Digital Transactions I argue that policymakers should provide ample space for competing private and public digital currencies to iterate in the market, guided by the decisions of billions of consumers, millions of businesses, thousands of banks, networks and processors, and hundreds of central banks.
Biden Will Seek Credit Card Fee Price Controls. Just Say No.
Prices dynamically allocate resources to where they’re most highly valued. No central planner no matter how clever or well-intentioned can match the vast intelligence of the seemingly messy and chaotic market. Price controls cause shortages. That is just as true in payments as in other markets. In the January 22, 2021 RealClear Markets I comment on the harm that would be caused if the Biden administration and Congress impose price controls on credit and debit card fees.
Too much concentration stifles payments innovation
Outsiders and smaller players have spearheaded major innovation in the payments industry. While there are delivery system, distribution, and regulatory and lobbying economies of scale, to a point, oligopolies rarely innovate. In the January 21, 2021 PaymentsSource I comment on payments innovation.
Prepare for the Coming Impact of Digital Fiat Currencies
In the January 5, 2021 Digital Transactions, I discuss the coming waving of Central Bank Digital Currencies and private digital fiat currencies. Amara’s Law obtains. Like with the Internet and mobile phones, we will tend to overestimate e-currencies’ near-term impact and underestimate their long-term impact.
Political – Not – Business Priorities Will Roil Payments in 2021
Christmas Eve 2020 in Digital Transactions Eve I comment on the increased politicization of the payments industry in the US, Europe, and China. The payments industry will have to navigate difficult political waters in the New Year.
The Tsunami of Virtue-Signaling in Financial Services
In the December 8, 2020 National Review I discuss rampant virtue-signaling by Davos management at America’s leading payments networks and banks and the danger to their shareholders and customers.
Get Ready For Much More Financial Regulation Care of Joe Biden
In the November 30, 2020 RealClear Markets I warn of the impending wave of value-destroying regulation of the financial-services industry, much of it likely to come from regulatory fiat rather than legislation.
Biden’s presidency means a heavier hand for government in payments
In the November 19, 2020 PaymentsSource I forecast much more aggressive regulation of the payments industry by the next administration.
in the November issue of Digital Transactions I discuss the state of play in instant interbank payments. Bank’s cooperative TCH with RTP, Early Warning Services with Zelle, and Visa, Mastercard, FIS, Fiserv, and Discover, leveraging card “rails,” are in the market. The Goliath Fed isn’t there yet, but is sure to muscle its way in. Realtime payment support a range of new use cases, and may eventually displace much of traditional ACH.
Ant’s non-payments ambitions make Alipay a global power
In the October 20, 2020 PaymentsSource in “Ant’s non-payments ambitions make Alipay a global power” I comment on Ant and its upcoming IPO, which is likely to be the biggest in history. Ant’s Alipay is a payments juggernaut which did a mind-boggling $17.4 trillion in payment volume in the year ended June, 2020, 99% of which was domestic. Unlike payments thoroughbreds Mastercard, PayPal, and Visa, Alipay is a platform providing a range of financial services. Credit, insurance premiums and asset-management generate 60% of its revenue. With a spate of investments abroad Ant is laying the groundwork to build a genuinely multinational business. However, notwithstanding capital from its IPO likely fueling further investments and acquisitions abroad, China’s enormous domestic market will remain Ant’s locomotive for the foreseeable future.
Facebook’s moves shake up ‘big tech’ payments balance
In the October 5, 2020 PaymentsSource I discuss the tech titans’ relentless march into payments. The social-media garguantua Facebook in particular has the potential to disrupt the reigning payments ecosystem. Facebook’s and Google’s collaboration with Jio Platform bears watching. Amazon and Apple have largely been incrementalist, leveraging and squeezing existing payment systems.
The Meaning of Ant, and What Could Be the Biggest IPO in History
In the September 29, 2020 RealClear Markets I discuss Ant’s epic IPO and compare Alipay’s payment system and “super app” with retail-payment networks like Mastercard, PayPal, and Visa.
In the September 19, 2020 National Review I comment on the Fed’s recently announced inflation-average-targeting strategy, flouting its statutory mandate to pursue “stable prices,” and the implications of easy money as far as the eye can see.
How GE Has Become a Shadow of Its Formerly Great Self
In the September 14, 2020 RealClear Markets I review Lights Out: Pride, Delusion, and the Fall of General Electric. It’s the cautionary tale of GE CEO Jack Welch’s handpicked successor Jeff Immelt, a derelict board of directors, and the destruction of one of America’s great and most iconic companies.
China Fires a Digital Shot Off of King Dollar’s Bow
In August 10, 2020 RealClear Markets I discuss the need for and benefits of digitizing the dollar, how digital greenbacks will make it easier for people and economies worldwide to dollarize, and competing public (Fed) and private e-dollars (from banks, Facebook’s Zuck buck, et al).
How Their Open-Banking Buys Could Propel Mastercard and Visa
In the July 20, 2020 Digital Transactions I discuss the rationales for global retail-payment networks Mastercard and Visa acquiring financial-data networks Finicity and Plaid, respectively, and how payment and data-sharing networks should reinforce each other.
Europe’s own network faces an uphill climb
In the July 15, 2020 PaymentsSource I discuss the EU’s latest putative payments champion the European Payments Initiative, its rationale, challenges finding a path to network critical mass and therefore relevance and viability, and how the EC and ECB may try to promote it.
Wirecard Was a Fairy Tale With an Unhappy Ending
Stories too good to be true often aren’t. In the June 29, 2020 Digital Transactions I discuss the high-flying German payments fintech’s fall, and compare it with Mozido and Powa Technologies, two once ballyhooed payment fintech unicorns whose stories were also too good to be true.
Fiat Currencies Should Come From the Private – not Public – Sector (Part Two)
In the June 22, 2020 Digital Transactions I argue against the Fed providing consumers and businesses with direct accounts at the central bank, law professors Morgan Ricks, John Crawfords, and Lev Menands’ proposed “FedAccounts.” Rather any Fed digital dollar should be two-tier, delivered through banks. Additionally, I applaud the coming wave of pure private-sector digital dollars, including Facebook’s coming dollar-backed Libra stablecoin or “Zuck buck,” banks’ digital dollars, and perhaps a Visa digital dollar delivered through its licensee banks.
Fiat Currencies Should Come From the Private – not Public – Sector (Part One)
In the June 19, 2020 Digital Transactions I discuss the coming wave of digital fiat currencies.
The Digital Revolution Won’t Be Enough to Supplant Payments’ Network Effect
In the Covid-19 pandemic and deep economic recession focus is on quarterly increases in contactless payments and e-commerce, consumers’ and merchants’ increasing aversion to transacting in cash, and when lucrative cross-border payments will start recovering. In the June 16, 2020 PaymentsSource I discuss what the global payment-network landscape will look like a decade hence.
Digital Dollars Will Boost King Dollar
The dollar is the world’s dominant currency. It dominates foreign-exchange reserves, foreign currency-denominated debt, foreign-exchange turnover, and cross-border interbank payments. Digital dollars will increase the dollar’s preeminence and powerful network effects. In the June 10, 2020 National Review I discuss.
The private sector can and should do the heavy lifting for digital currencies
In the May 18, 2020 PaymentsSource I discuss the range of central bank and private-sector digital currency initiatives.
Will the coronavirus hasten the end of cash?
In the May 9, 2020 Las Vegas Review-Journal I discuss the Covid-19 pandemic’s making consumers and merchants increasingly reluctant to transact in cash and thereby accelerating electronic payments displacing cash.
In the May 1, 2020 issue of Digital Transactions I discuss the Covid-19 pandemic’s near-term and lasting impacts on the payments industry
Covid-19 will spur EU payments dirigisme and protectionism
In the May 1, 2020 Paypers, I discuss the EC’s self-congratulatory assessment of its interchange price controls, and the likelihood that the Covid-19 pandemic will spur further intervention and efforts to launch and protect EU payments champions.
Worldline and Ingenico: The What, the Why, And the What’s Next? Part 2
In the March 2, 2020 Digital Transactions discusses Worldline’s acquisition of Ingenico. Fiserv’s, FIS’s, and Global Payments’ acquisitions of First Data, Worldpay, and Total Systems, respectively, created three American payment-processing behemoths. The combination of Worldline and Ingenico creates a Gallic payment-processing rival.
Worldline and Ingenico: The What, the Why, And the What’s Next? Part 1
In the February 28, 2020 Digital Transactions discusses Worldline’s acquisition of Ingenico.
Payment nationalism is harming innovation
In the January 30, 2020 PaymentsSource I argue governments favoring national payment systems puts a damper on innovation, value creation, and market discipline, thereby harming banks, merchants, and consumers.
In the December, 2019 issue of Digital Transactions I compare and contrast “the Zuck buck” and Bitcoin, and urge Zuckerberg and Marcus to find hospitable jurisdictions where they can launch Libra.
Faster payments’ public option will harm competition
In PaymentsSource I argue the Fed shouldn’t enter the real-time interbank payments market. The fast-developing faster-interbank payments market is already served by TCH, Visa, Mastercard, FIS, Fiserv and EWS. Worryingly the Fed will be competing with entities it regulates. It will be competing with the private sector, which it should only do if that’s the only way to ensure a competitive market. And the central bank competing in faster payments will deter and suppress private-sector payments competition and innovation. Perhaps most worrisome, the Fed isn’t independent. Congress is supposed to be its master. The legislature however abdicated its prerogative and contented itself with the Fed briefing it on what it plans to do.
Federal Reserve has no business becoming a climate change partisan
The San Francisco Fed has started socializing introducing climate-change considerations into financial regulation. In the Las Vegas Review-Journal I contend this is an extraordinarily dangerous idea that is outside the Fed’s mandate and would cause enormous economic harm. It should be smothered in the crib.
Here’s why the Fed should stay out of real-time payments
In Digital Transactions I make the case that the Fed should’t enter the burgeoning real-time payments market. There are already a handful of private-sector competitors to ensure a vigorously competitive and innovative market. The central bank shouldn’t compete with the private sector except if it’s participation were the only way to prevent a monopoly.
Facebook’s Cryptocurrency Libra Provokes a Firestorm on Capitol Hill
In the July, 2019 issue of POSitivity discusses the promise of Facebook’s proposed stablecoin and payment system Libra, and challenges it faces running the regulatory gauntlet and finding a path(s) to network critical mass.
India’s payments favoritism is hurting innovation
In PaymentsSource discusses Indian finance minister Nirmala Sitharaman’s recent proposal that the RBI and banks “absorb” the costs of providing a range of electronic payments.
Why Visa and Mastercard Have Been on a Buying Spree
In Digital Transactions discusses globally dominant payment networks Mastercard’s and Visa’s use of acquisitions to expand their addressable markets en route to trillion dollar market caps.
EU regulators are overstepping with non-EU card fee caps
There’s a curious mercantalist asymmetry to the European Commission in April jawboning Mastercard and Visa to lower interchange fees on credit and debit cards used inside the EEA but issued elsewhere. In the May 16, 2019 PaymentsSource I discuss.
Facebook’s crypto would be a payments and ad machine
Facebook appears to be on the brink of launching a stablecoin-based payment system. While building critical mass in payment systems is notoriously difficult, with 2.3 billion users and ample resources, the social-media Gargantua would appear to have the reach and heft to give it a go. In the May 9, 2019 PaymentsSource I comment.
Putting sunlight on currency-conversion fees to protect consumers
While it could and should have gone further, I applaud the EU’s effort to enhance currency-conversion fee disclosures.
Virtue-signaling banks hurt shareholders and customers
In the April 29, 2019 American Banker I decry management of major banks and payments companies engaging in virtue-signaling rather than zealously tending to their businesses.
Complex consolidation won’t save payment incumbents from fintechs
In the April 2, 2019 PaymentsSource discuss the rationales for FIS’s acquisition of leading merchant acquirer Worldpay and Fiserv’s acquisition of the world’s largest payment processor First Data, and touted cost and revenue synergies.
EU should focus more on innovation than intervention
In the March 14, 2019 PaymentsSource criticizes the EU’s penchant for directing payments markets and attempts to create EU champions.
The Original Too-Big-to-Fail Bank
February 22, 2019 in Citi Journal reviews James Freeman’s and Vern McKinley’s Borrowed Time, which vividly recounts the storied bank’s history from financial Rock of Gibraltar to a politicized bank repeatedly bailed out by the government.
More often than not, political battles harm payments
In the February 15, 2019 PaymentsSource decries politics’ generally harmful impact on payments markets and consequently on consumers, merchants and banks.
In the February, 2019 issue of Digital Transactions discusses the wave of putatively disruptive fintechs and five promising payments ventures – Beyond, Marqeta, Modopay, RS2 North America, and Veem, that solve real customer problems and employ time-tested business models.
The First Data/Fiserv combo is bigger, but still slow
In the January 24, 2019 PaymentsSource discuss the rationale for Fiserv’s acquisition of the world’s biggest payments processor First Data and touted cost and revenue synergies.
Real-time payments need more competition
In the American Banker discusses the Fed’s socializing entering the real-time interbank payments market and the possibility and value of more private-sector competition there.
In the Washington Times reviews Borrowed Time in which James Freeman and Vern McKinley tell iconic Citi’s story from the War of 1812 through the financial crisis – the good, the bad and the ugly.
EU should help payments markets work better
In the November issue of POSitivity argues that the EU should mandate more robust disclosure of foreign currency conversion options’ costs when cardholders use their cards abroad at merchants and ATMs, and that to improve intra-EU cross-border payments mandating banks offer at least two providers would be a better approach to improving the market than price controls.
When Collaboration Makes Sense – And When It Doesn’t
In the October issue of Digital Transactions discusses the merits of open and closed payment networks and the increased networks’ willingness to collaborate and interoperate to extend reach and build network mass and therefore relevance..
An analysis over EU’s proposal on cross-border payments regulation
Discusses the EU’s proposal to improve Dynamic Currency Conversion disclosures at the pos and ATMs.
Yes, Mulvaney’s strategic plan would shackle CFPB – as it should
In the American Banker applaud Acting Director Mick Mulvaney’s proposal that major CFPB rules be subject to congressional approval.
How to avoid being gouged when traveling
In the Washington Times discusses exorbitant fees travelers abroad are exposed to when paying with credit cards and when merchants offer consumers the option to pay in their native currency urges global networks Mastercard and Visa to require full disclosure of the costs of paying in the local and cardholder’s home currencies.
Why foreign exchange fees for credit cards need to be curbed
In Banking Strategies Magazine urges Mastercard and Visa to take a cue from the European Commission and mandate when Dynamic Currency Conversion is offered by a merchant or ATM on their products, that the costs of paying in the local and cardholder’s currencies be fully disclosed side-by-side.
Adyen and the New Age of Global Payments Processing – Part II
In Digital Transactions discuss Dutch payment-processing Phenom Adyen.
Adyen and the New Age of Global Payments Processing – Part I
In Digital Transactions discuss Dutch payment-processing Phenom Adyen.
Return to sender: Here’s what’s wrong with postal banking
In the American Banker decries Senator Kirsten Gillibrand’s proposal that the US Post Office provide consumer credit, debit cards and other banking services.
Mastercard and Visa should eliminate Dynamic Currency Conversion
In PaymentsSource urges the two global retail-payment networks Mastercard and Visa to curb Dynamic Currency Conversion.
In Digital Transactions I discuss the Trump administration’s impact on the CFPB thus far. Acting Director Mick Mulvaney has reined in a lawless and politicized CFPB. The Bureau however hasn’t been institutionally checked by courts or legislatively restrained.
Mick Mulvaney has ignited a firestorm to rein in the CFPB
In the Hill I discuss Acting Director Mick Mulvaney curbing an absolutist CFPB and thereby provoking the Left’s Furies.
The Fed’s promoting modest inflation is bad policy and at odds with its statutory mandate
No institution has as much influence over price levels as the Federal Reserve Board of Governors—which also acts as the country’s paramount financial regulator. Present and expected future price levels undergird every economic decision: to extend credit, borrow, save, invest and consume. In Banking Strategies Magazine I decry the central bank targeting 2% inflation – a doubling of the price level every 35 years, and Congress turning a blind eye.
Federal Reserve thumbs nose at Congress yet again on inflation
In targeting 2 percent inflation, the Fed is flouting its statutory mandate to promote stable prices. Prices doubling every 35 years aren’t stable. Stable means zero inflation. Nobody would say a boxer whose weight increased 2 percent every year had stable weight. On top of being lawless promoting modest inflation is bad policy. In the Hill I discuss.
EC funds are not the way to spur venture capital and innovation in the EU
In Blogactiv.eu I contend EC funding would inevitably politicize venture capital and that the path to spurring venture capital and innovation within the EU is to create regulatory and tax conditions more favorable for venture capital and private enterprise.
The Case for Alternative Currencies
In Citi Journal I review monetary economist George Selgin’s book Money Free and Unfree in which he makes a cogent case that free banking and currency competition and decries the Fed’s performance. Largely private monetary arrangements have worked in the in the past in Scotland, Canada and the U.S. Scotland in the 18th and first half of the 19th century was the golden age of banking innovation where lightly-regulated banks issued currency and policed each other.
Adyen’s omnichannel model positions it well in the tough acquiring space
In PaymentsSource I discuss Dutch payments unicorn Adyen, its distinctive model, explosive growth and prospects.
India’s exploding payments market: When electronic goes electric and eclectic
In Banking Strategies Magazine I discuss the fast-evolving, open and in-play Indian payments market. Traditional card networks Mastercard, Visa and Rupay, tech behemoths such as Google, digital-wallet-anchored payment networks like Paytm, mobile network operators, the Chinese fintech giants, and a range of nontraditional payment systems, are in the competitive mix. Growth is explosive. In September yoy debit transactions increased 112%. In October UPI transactions increased 148% over the prior month.
Regulators say they promote innovation, but the opposite is true
In the American Banker I contend there’s a Laffer Curve of financial-services and payments innovation. More regulation, more regulators and more regulatory uncertainty inhibit innovation. Regulators setting up “sand boxes” in which they exempt approved fintechs from regulations testifies to the problem.
TSYS’ diversification moves have more upside – Intrepid’s Grover
In PaymentsSource I discuss the good, the bad and the ugly of industrial-strength processor Total Systems’ expansion overseas and of its product suite, and the disturbing departure of Pam Joseph who was widely believed to be inline to succeed CEO Troy Woods.
India’s open payments competition can spread to other markets
In PaymentsSource I discuss the epic developing struggle in the mother of all emerging payments markets between Chinese payments fintech giants Ant Financial and Tecent competing through Indian proxies, global tech titans Facebook and Google, MNOs, and traditional payment networks including Mastercard, Visa and Indian national champion Rupay.
In the October, 2017 issue of Digital Transactions I discuss the implications of the EU’s Payment Services Directive 2 on the existing payments ecosystem.
The evolution of money and its delivery systems
I review David Birch’s Before Babylon, Beyond Bitcoin.
China’s payments giants will struggle to reach international markets
In PaymentsSource I discuss Chinese payments dragons Alipay’s, China UnionPay’s and WeChat Pay’s expansion overseas, use of merchant acquirers and processors to build acceptance,Alipay’s and WeChat Pay’s distinctive approaches, Ant Financial’s assembling a portfolio of payments assets outside China, and Alipay’s and WeChat Pay’s prospects challenging reigning traditional networks outside China, particularly in emerging markets.
In Citi Journal I a sound a clarion alarm over the Financial Stability Board’s call for climate-change-risk financial disclosures, contending inevitably it would raise the cost of capital for politically out-of-favor industries such as fossil fuels and cause systemic capital misallocation to politically favored industries, making the world poorer.
Banks can succeed without the Fed
In the American Banker using George Selgin’s eye-opening Money Free and Unfree as a fulcrum I contend competition in money as in other sectors would self-police, deliver better value and be more innovative than central bank monopolies. From the tail end of the 17th century through the mid 19th century with free banking and banks issuing competing notes Scotland enjoyed the most innovative banking system in history – a banking system that had a significantly lower bank-failure rate than England, In the U.S. for much of the 19th century up until the Fed’s formation in 1913 U.S. banks issued currency and self-policed. And Canada which has enjoyed one of the most crisis-free banking systems ever, had no central bank until 1935. And private banknote issuance wasn’t banned until 1944.
Payment hubs are ‘invisible,’ but necessary for a dynamic future
In PaymentsSource I discuss the rapidly evolving payments-hub space, traditional players, new and interesting specialists, and giants such as software gorilla ACI Worldwide and MasterCard that are in excellent positions to enter from adjacent space.
Markets, not governments, should drive cash’s replacement
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.
The card fee battle makes a welcome pivot against the merchant lobby
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’s debit network has unrealized potential
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.
So what if banks push fancy cards? Give consumers the steak they want.
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. And in the Hill I applaud issuer and network competition delivering reward-rich credit cards to consumers, decry 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.
Negative interest rates aren’t just dangerous. They don’t work.
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.
Look Who’s Going for Network Effects
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.
Globalization’s one-way street
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.
Democrats, Too, Are Needed to Overhaul Dodd-Frank
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.
To Open China Trade, Start With Payments
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.
What the Age of Trump Means for Payments
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.
Where Should Trump Start on China Trade Policy? Visa and MasterCard
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.
Why You Shouldn’t Count on Real-Time ACH for Retail Payments
In Digital Transactions discusses the challenges harnessing real-time payments between DDAs to support retail payment systems.
The Big Financial Problem: Mandarins Making Law
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.
Don’t Take Tech Giants’ Payments Ambitions Lightly
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.
The Regulatory Effect in Faster Payments
In Banking Strategies contrasts the approaches of EU, UK and US regulators have taken encouraging faster interbank payment systems.
Governments Should Just Butt Out of Payments Competition
In the American Banker discusses global retail payment network competition and protectionism and national network champions.
Banks Are at the Mercy of Regulatory Absolutism
In the American Banker sounds an alarm over the impact of an administrative state on steroids on the financial services industry.
Reining in regulatory absolutism
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.
Regulators Should Cheer Faster Payments from Sidelines
In the American Banker discusses regulators’ role spurring faster interbank payments.
GOP Win in November Is First Step to Killing Dodd-Frank
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.
Contrasting Payments Innovation in Europe and the U.S.pdf
With Trust EU Affairs’ Monica Monaco discusses differences between payments innovation in Europe and the U.S. and regulation’s impact.
Let Competition Do Its Job.pdf
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.
Suppressing job and wealth creation – Dodd-Frank doesn’t address the cause of the financial crisis
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.
First Data: Lots of Progress, But Still More to Do.pdf
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.
Mobile Payments Remain the Endgame.pdf
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.
Do Visa and MasterCard Have a Chance in China?pdf
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.
Mobile Payments Are On Fire: Who Will (Finally) Usurp the Payments Market?pdf
Discusses the mobile payments land rush, different players’ aspirations and why it matters.
Dangers of Housing Policy ‘Hidden in Plain Sight’ No More.pdf
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.
How bad housing policies led to the financial crisis.pdf
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.
Fed Should Tread Carefully in Faster Payments Plan.pdf
In the American Banker discusses the Fed’s proposal to shepherd the US payments industry to faster interbank payments.
Regulatory Straitjacket Will Put a Damper on Payments Innovation and Competition.pdf
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.
A New Congress, a New Chance to Rein In the CFPB.pdf
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.
The Payments Industry Should Lead the Charge in Interchange Wars.pdf
In the American Banker urges the payments industry to make an affirmative pro-consumer case for repealing the Durbin Interchange Amendment.
The Postal Service Isn’t a Bank.pdf
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.
The CFPB’s New Prepaid Rule: The Good, the Bad and the Ugly.pdf
In the January, 2015 Digital Insights discusses the CFPB’s role and the impact of its prepaid rule.
Payment trends.pdf
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.
Apple Pay as Enhancer, Not Disruptor.pdf
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.
Consumers are being fleeced by card currency conversion charges(*pdf)
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.
‘Contemplating the Yin and Yang of Payments’ (*.pdf)
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.
Stop Gouging Travelers with Dynamic Currency Conversion (*.pdf)
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.
Existing Titans Will Trounce Payments Disruptors (*.pdf)
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.
How Much Regulation? It’s up to You (*.pdf)
In Digital Transactions discusses the prospects for and greatest potential threat to increased payments competition, innovation and value over the next decade.
Brussels must scrap regulatory push on card-payment transactions (*.pdf)
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.
Yellen’s Policy Views Matter, Not Her Gender (*.pdf)
In the American Banker chides the editors for gushing over Janet Yellen’s gender, rather than focusing on her troubling dovish policy views.
Solving the financial crisis, by causing another (*.pdf)
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.
Congress Should Repeal the Durbin Amendment (*.pdf)
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.
Make Banks AntiFragile – Release Washington’s Stranglehold (*.pdf)
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.
Breaking Up Megabanks: The Lesser Evil (*.pdf)
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.
Dodd-Frank Ushers in a Corporatist Era in Banking (*.pdf)
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.
Dodd-Frank regulations strangling economy: ‘Too big to fail’ has got to go (*.pdf)
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.
Interchange Armistice? Not a Chance. (*.pdf)
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.
CFPB’s unchecked power: New bureau’s hunt for financial scalps (*.pdf)
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.
Message to Europe: Get Out of the Way (*.pdf)
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.
Bloated government shrinks the economy (*.pdf)
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.
Is Financial Repression Leading America Down a Road to Ruin? (*.pdf)
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.
Heller’s rhetoric doesn’t match his proposals on housing, unemployment (*.pdf)
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.
There’s a lot to like about Facebook Credits (*.pdf)
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.
Facebook Should ‘Share’ More About Plan for Payments (*.pdf)
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.
From Brussels to Beijing, Regulators Block Open Payment Networks (*.pdf)
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.
How the Merchants Could (Unintentionally) Help out the Banks (*.pdf)
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.
Whose Green Stuff to Fund Green Energy? (*.pdf)
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.
We need more failure – Coddling bad decision-makers undermines our economy (*.pdf)
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.
Merchant Suit is Right, Fed Went Rogue on Durbin (*.pdf)
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.
Bankers: Keep Up the Innovation, Fight the Utility Model (*.pdf)
In the American Banker challenges American Banker editor Andy Sobel’s urging banks to forego innovation and instead act like utilities.
Economic blowback from ‘Durbin fees’ (*.pdf)
In the Washington Times discusses why the Durbin Interchange Amendment causes higher debit card fees and a weaker debit value proposition for consumers.
Bankers Should Call Every New Charge a ‘Durbin Fee’ (*.pdf)
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.
Why Payments Roles Are Blurring – And Why It Matters (*.pdf)
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.
Durbin Amendment’s Gray and Not-So-Gray Areas (*.pdf)
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.
PayPal Unlikely to Escape Durbin Pain (*.pdf)
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.
Dismantling overbearing financial reforms (*.pdf)
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 Fed Can’t Ignore the Durbin Amendment (*.pdf)
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.
Stop the Fed’s Dual Mandate and Boost the Dollar (*.pdf)
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.
Government Usurping Market Role in Interchange (*.pdf)
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.
Dodd-Frank Bill Doesn’t Right What Fed Got Wrong (*.pdf)
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.
Trouble Ahead for the Dynamic Duo (*.pdf)
In Digital Transactions discusses MasterCard’s and Visa’s businesses, the payment network competitive landscape, and their principal opportunities and threats.
Press China to Keep Card Promises (*.pdf)
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.
Latest Card Bill Destructive to Industry, Users (*.pdf)
In the American Banker criticizes Congress’s proposal to impose a national usury limit and penalty fee caps on the credit card industry.
What went wrong with First Data? Payment processor shows signs of trouble (*.pdf)
In the Deal Magazine discusses challenges facing KKR’s enormous First Data LBO.
With an IPO Possible in 2010, Better Days Ahead for First Data? (*.pdf)
In Cards & Payments magazine discusses First Data’s LBO, challenges and prospects.
Shifting tides for Brazil’s credit card waters (*.pdf)
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.
Fee Debate Shifts with Political Winds (*.pdf)
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.
Keep Government Out of the Cards Industry (*.pdf)
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.
More competition not protectionism and paternalism for Europe’s card-payment market (*.pdf)
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.
Let Market, Not D.C., Set Interchange Rates (*.pdf)
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.
Visa and MasterCard Need to Ditch Their ‘Rope-a-Dope’ Interchange Strategy (*.pdf)
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.
Regulation of interchange is not the solution (*.pdf)
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.
What MC, Visa Can Learn from Wal-Mart ILC Bid (*.pdf)
In the American Banker urges the card payment networks to make a more aggressive, affirmative case in the public and political arena.
Card-payment network competition ‘reduces eurozone’s grey economy’ (*.pdf)
In Euractiv.com comments on the effects of EU and national regulators intervention in the card payment network markets.
Options Abound for Post-Spinoff Discover (*.pdf)
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.
Lessons Visa Can Learn From MasterCard’s IPO (*.pdf)
In the American Banker lays out how Visa can benefit from and improve upon MasterCard’s IPO experience.
MasterCard Europe – Different But Not Better (*.pdf)
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.
Let Open Market Decide the Fate of Interchange (*.pdf)
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.
Why MC’s Revamp Will Work (and Visa’s Won’t) (*.pdf)
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.
MasterCard’s Brave New World, Post-IPO (*.pdf)
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.
Priceless? (*.pdf)
In the Deal discusses how much MasterCard will be worth and key factors that will influence its valuation.
Why New Chief Should Take Visa Public (*.pdf)
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.
Why you need a bureau – a French case study (*.pdf)
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.
Setting Interchange Fees Best Left Up to the Market (*.pdf)
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.
French firms should follow Israeli model (*.pdf)
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.
Let Markets Set Rates, Policy for Interchange (*.pdf)
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.
Credit scores could fuel P2P Commerce (*.pdf)
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.
A Nirvana for Marketers: Data Sharing (*.pdf)
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.
