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12 March 2012Bart Narter
Boy was I surprised to learn that I was carrying a global payment instrument and I didn't even know it. It was my Starbucks card. In Canada, I can use my US dollar-funded Starbucks card and Starbucks would handle the foreign exchange from Canadian dollars and bill my US Starbucks account. In Canada I was told my card would work in many countries. Wow! MasterCard, Visa, and Amex lose at least a chunk of the interchange and the foreign exchange margin. Starbucks gets customer spend data at SKU level, lower or no interchange, and some additional profit on the exchange. All for the price of a cup of coffee..... Few retailers have the customer loyalty and spend to drive card holding, but some do: Wal-Mart, Target, Kohl's, Home Depot, Lowes, to name a few. I also believe that mobile wallets will make it easier to carry multiple cards, and that retailers will offer enough back to consumers to motivate them to use these cards. Mobile wallets could make it easier than ever to carry and select from a dozen or more payment cards and disrupt the Visa, MasterCard, Amex dominance of this market today. We live in interesting times.