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That evening, at a small party thrown by loyalty rewards provider called Truaxis, I ask a payments and security researcher named Aaron McPherson about the MCX announcement.
He thinks MCX is just posturing; flexing its merchant might in order to scare the money establishment into a position of weakness.
“They aren’t really going to launch a digital wallet,” says McPherson. “They’re just threatening to, so they can negotiate better interchange fees.”
Retailers currently have to pay these interchange fees every time someone buys something with a credit card. With the impending shift toward digital wallets, MCX member companies see their chance to shift the balance of power: Lower our fees, or we’ll lock you out.
In other words, the Immediate Future Of Money looks like this: the four largest credit card companies in the world battling with 21 of the largest retailers in the world over a few percentage points on the way we’ve all been doing business for the last 50 years.
He thinks MCX is just posturing; flexing its merchant might in order to scare the money establishment into a position of weakness.
“They aren’t really going to launch a digital wallet,” says McPherson. “They’re just threatening to, so they can negotiate better interchange fees.”
Retailers currently have to pay these interchange fees every time someone buys something with a credit card. With the impending shift toward digital wallets, MCX member companies see their chance to shift the balance of power: Lower our fees, or we’ll lock you out.
In other words, the Immediate Future Of Money looks like this: the four largest credit card companies in the world battling with 21 of the largest retailers in the world over a few percentage points on the way we’ve all been doing business for the last 50 years.
http://www.digitaltrends.com/cool-tech/the-future-of-money-its-not-in-your-hands/#ixzz2EgUhu3hS
Having worked in the financial services sector, I can assure you that anything which changes the fundamentals by even a fraction of a percentage point is a massive deal. Think about your mortgage payment and how pleased people are when official interest rates drop by half a point. Multiply that effect a billion times in the commercial sector and you begin to understand why businesses allocate so many resources to gaining even a fraction of a point in revenue or saving a fraction of a point in cost.
Suze Orman made a valid point in her keynote address. Right now there are too many choices and it's too complicated for consumers to use them (this must be a mostly US thing because it's incredibly simple to do everything with a single debit card account here). Simplicity and convenience are going to be key in the fight for market share.
