Today’s consumer payments are costly and complex –
Consumer Payments Today are Costly, Complex and Slow
My immediate reaction was shock; the percentage for the banks was a lot higher than I expected. They have realized that they can’t rely on the card networks to provide a compelling customer experience — they have to own the experience. This really came to fruition a few years ago when JP Morgan Chase bought technology from Visa and started dealing directly with the acquirers. Is this the future of the industry? Big banks working directly with large retailers? The consortium of MCX would have significant leverage to work with a few select banks in the U.S.
From a retailer’s viewpoint, the survey indicated 44% wanted to cut out intermediaries that add costs to the process. Costs that prevent investment in value enhancing services. With regulations coming into play across the world (e.g., Durbin and PSD 2), the business model of traditional card-based payments has to change. There can no longer be inefficiencies within the process as there is no longer significant margin within each transaction. With close to half of the retailers wanting to work directly with banks, what does this do to the business of Visa and MasterCard?
In March 2014, ACI unveiled a strategy we called Real-Time, Any-to-Any Payments. Within this strategy, we outlined a future without the card networks and with retailers working together with banks. By delivering a seamless customer experience though a bank-branded card or app, we felt that there were billions to be freed up in the industry. Here is a description of how the transaction could flow –
Consumer Any-to-Any Payments
As we start to fully digest this survey, I’m sure there will be fascinating regional differences and more compelling stories coming about the views of retailers, banks and billers!