The Merchant-Bank Struggle for Control of Payment Systems
The Journal of Financial Transformation's September 2006 issue contains an article by Adam Levitin - an attorney in Wilmington, Delaware - titled "The Merchant-Bank Struggle for Control of Payment Systems" (PDF). His conclusion: "The ultimate outcomes of these developments are uncertain, but one thing is not: the payments industry will look very different in a decade."
ABSTRACT: Merchants and banks are currently engaged in a wide-ranging struggle for control over payment systems. The conflict is playing itself out in business practices, in banking regulation, in corporate governance, in corporate restructuring, in securities offerings, and in the biggest antitrust litigation since AT&T. Yet, it is possible that the extraordinary energy being spent in this fight is for naught, as the growth of national bank brands, technological developments, and innovative business models are likely to result in a radical reshaping of the payments world. This article reviews the factors behind the struggle between merchants and banks and the strategies adopted by each, and questions what impact changes in the payment card industry's structure and the emergence of new payments technologies and business models will have on the merchant-bank contest.
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