Be careful what you ask for....

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21 May 2009
Bart Narter
At the MasterCard analyst conference in Purchase, New York, executives talked about buying newspaper with your mastercard at a vending machine. The same goes for transit fares, lattes, etc. While a case can be made for the merchant and it is certainly a win for the associations, it is unclear how big a win it is for the banks. If a consumer buys a $1.00 newspaper, the vendor could argue that the interchange saves the merchant from handling the cash. It's a win. The association gets increased volume and revenue for the network. They also get greater share of wallet. That's a big win. The bank gets under 2 cents of interchange on a debit card. Is that a win for the bank? They have costs associated with processing of that transaction that certainly exceed the interchange revenue. Do banks want to increase these transactions? On an individual basis, probably not. It might be worth it if this brings them to the front of wallet for other transactions as well, it could be worth it. Cards are moving to lower and lower transaction amounts and banks need to think about the implications for their card business as these transactions increase.

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Sector
Content Type
Blogs
Location
Asia-Pacific, EMEA, LATAM, North America