In an article titled 'The U.S. Payments System: Needing Consolidation, or Fine As Is?" by Christopher Westfall, Managing Editor of the KPMG Banking Insider, one senior banker is quoted as saying "right now there are too many ways to pay into too many systems." Westfall's article looks at efforts underway examining potential consolidation of US payments - in particular, convergence of the ACH and check image exchanges.

Josh Fineman writes for Bloomberg about Safeway's Blackhawk Network subsidiary - reporting that "the unit is bringing unexpected gains to the third-largest U.S. grocery chain." Fineman notes that Blackhawk distributes the gift cards of more than 185 retailers, including Starbucks Corp., Barnes & Noble Inc. and Apple Computer Inc.'s iTunes.

In an article titled Taking Charge at Discover, Liz Moyer and Tara Weiss write for Forbes about David Nelms, CEO of soon to be independent Discover Financial Services. In their interview of Nelms, he comments "the ability to provide debit services made a huge change."

Zhu Wang of the Payments System Research Department of the Federal Reserve Bank of Kansas City has written a new paper titled "Market Structure and Credit Card Pricing: What Drives the Interchange?" (PDF) that "presents a model for the credit card industry, where oligopolistic card networks price their products in a complex marketplace with competing payment instruments, rational consumers/merchants, and competitive card issuers/acquirers. The analysis shows card networks demand higher interchange fees to maximize card issuers' profits as card payments become more efficient. At equilibrium, consumer rewards and card transaction volume also increase, while consumer surplus and merchant profits may not. The model provides a unified framework to evaluate credit card industry performance and government interventions."

Fumiko Hayashi of the Payments System Research Department at the Federal Reserve Bank of Kansas City has written a preliminary new paper titled "Pricing and Welfare Implications of Payment Card Network Competition" (PDF) that examines how competition among payment card networks—three-party scheme networks and four-party scheme networks—affects pricing as well as the welfare of various parties.   » Continue Reading

Terri Bradford, Payments System Research Specialist at the Federal Reserve Bank of Kansas City, has written a briefing paper titled "Paper, Plastic......or Phone?" (PDF) that examines mobile-phone payment and banking alternatives in the United States. The paper explores prospects for growth, available technologies, and the outlook for one or more technologies coming to dominate the market.

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