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July 12, 2003

Visa International: The Virtuous Cycle - Electronic Payments and Economic Growth

Earlier this month, Visa International published a white paper titled The Virtuous Cycle - Electronic Payments and Economic Growth (PDF). It contains a number of interesting conclusions. For example:
Based on an analysis of a cross-section of 50 countries, increasing the existing share of electronic payments in a country by a margin of just 10 percent will generate an increase of 0.5 percent in consumer spending. For example, in a country that has a 20 percent card share of US$30 billion in consumer spending, enlarging that share to 22 percent will generate roughly US$150 million in incremental consumer spending.
Electronic payment networks have the potential to provide cost savings of at least 1 percent of GDP annually over paper-based systems through increased velocity, reduced friction and lower costs. For the U.S. economy, that translates into roughly US$60 billion in annual savings. In the U.K., savings would be on the order of US$10 billion annually.

ID Federation Specs ready for financial services

Thor Olavsrud reports on the FSTC's review of SAML and the Liberty Alliance's Identity Federation Framework.

July 09, 2003

The wave of the future is at hand

An article in Baseline Magazine reports on proximity payments.
Big retailers can speed up the payment process˜and pocket the money they used to pay Visa and MasterCard in the process. Generally, Visa and MasterCard charge retailers about 1.9% of the total purchase for debit and credit transactions across their network. MasterCard charges less for "quick payment" merchants, like fast food and movie chains, but won't say how much. By comparison, Speedpass charges a flat rate of about 20 cents per wireless transaction. So, when a consumer chooses Speedpass instead of a credit card on a $100 transaction, the merchant puts $1.70 back in his pocket.

July 07, 2003

RFID in retail - game over?

Business Week reports on Wal-Mart's decision to require its top 100 suppliers to start using RFID for some applications by January 2005.
Given Wal-Mart's enormous size and influence, the technology could spread quickly: Not only will other retailers be forced to adopt it to remain competitive, the wider use will also bring down installment costs. "A lot of people don't want to be the first in the water," says Kevin Ashton, head of the Auto-ID Center, a consortium that is developing RFID. "But one Wal-Mart is worth 101 other companies."

WSJ: Lawsuits may benefit American Express

This morning's Heard on the Street column in the Wall St. Journal (subscription required) reports on how the recent lawsuits in the credit card industry may benefit American Express.
One factor in Amex's favor: Fees paid by merchants to it are as much as half a percentage point higher than those paid to Visa and MasterCard. That makes it harder to sign up merchants, but easier to sign up banks. "Financial institutions will look into their portfolio of existing cardholders, identify some that aren't particularly profitable, and see if they can migrate them to an Amex product that generates higher fees from merchants," says David Robertson, the publisher of the Nilson Report, a trade publication following card-industry trends.


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