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« March 7, 2010 - March 13, 2010 | Main | March 21, 2010 - March 27, 2010 »

March 19, 2010

Regulating Debit Cards: The Case of Ad Valorem Fees

The Federal Reserve Bank of Kansas City's Economic Review for 1Q2010 includes an article titled "Regulating Debit Cards: The Case of Ad Valorem Fees" by Zhu Wang. From the abstract:

Debit cards have become an indispensable part of the U.S. payments system, accounting for more than a third of consumer payments at point of sale. With this development has come controversy: Card networks charge merchants fees that merchants believe are too high. And most of the fees are ad valorem―that is, based on transaction value―rather than fixed fees per transaction.

Given that debit cards incur a fixed cost per transaction, why do networks charge ad valorem fees? How do ad valorem fees affect payment market participants, including consumers, merchants, and card networks? And should policymakers consider regulating debit cards by requiring fixed per-transaction fees?

Wang explores this controversy about debit card fee structures. His analysis shows that, when card networks and merchants both have market power, card networks earn a higher profit by charging ad valorem fees than fixed per-transaction fees. At the same time, merchant profits are reduced―yet both consumer surplus and social welfare are increased. As an alternative, policymakers might consider regulating the debit fee structure simply by requiring fixed per-transaction fees (but allowing card networks to freely set the fee levels). Wang suggests, however, that this alternative may increase merchant profits at the expense of card networks, consumers, and social welfare. Therefore, caution should be taken when policymakers consider intervening in the debit card market."

March 18, 2010

March 17, 2010

What's Coming Up at Glenbrook!

Glenbrook's Russ Jones and Erin McCune are presenting a webinar titled "PayPal and B2B" on Thursday, March 18, beginning at 10:30 AM Pacific. "PayPal recently introduced impressive new product capabilities, with its “PayPal X Platform”, including Adaptive Payments and Adaptive Accounts. These capabilities, along with new pricing which is expected to be announced this spring, give PayPal a base to expand into business-to-business (B2B) payments. Glenbrook partners Russ Jones and Erin McCune discuss the nature of the opportunities that PayPal appears to be exploring now – and what the future might hold." REGISTER NOW ($249)

European Payments Council Annual Report 2009

The European Payments Council (EPC), the coordination and decision-making body of the European payments industry, has published its EPC Annual Report 2009. "The EPC delivers the payment schemes and frameworks necessary to create the Single Euro Payments Area (SEPA). SEPA is an EU integration initiative in the area of payments designed to realise the completion of the EU internal market and monetary union. SEPA is currently defined as consisting of the EU 27 Member States plus Iceland, Norway, Liechtenstein, Switzerland and Monaco. The EPC Annual Report 2009 highlights further substantial progress achieved in the following areas covered by the EPC work programme." READ MORE »

ClairMail Announces New Mobile Connectivity Architecture

ClairMail has announced a new Mobile Connectivity Architecture (MCA) that it says provides a "platform to help Financial Institutions (FIs) future-proof their mobile delivery channel powered offerings. In practice, MCA enables FIs to realize the potential benefits of mobile financial services, while providing custom connectivity that easily deploys expanding initiatives across all internal businesses and channels as mobile services and strategies evolve." READ MORE »

Discover Financial Services - Financial Community Briefing

Discover Financial Services is holding a financial community briefing today. The webcast begins at 1 PM Eastern time. Discover's presentation material was filed in an SEC 8-K earlier today.

Venture Infotek Issues 20 Million Debit Cards for State Bank of India

Venture Infotek has announced issuing a record 20 million debit cards for the State Bank of India. Venture Infotek says its Cards and Fulfillment division "has the biggest state-of-the-art secure card personalization bureau in India with a capacity to personalize 48 million cards per annum, out of which it is using a substantial portion of its capacity for State Bank of India." READ MORE »

PayPal, China UnionPay Partner to Enable eCommerce in China

PayPal and China UnionPay have announced that China UnionPay (CUP) card members will be able to use PayPal to shop online - "representing a new opportunity for international retailers to sell to a large base of Chinese customers who, combined, hold 2.1 billion CUP cards." READ MORE »

Headline News - March 17, 2010

Note: Throughout the day, as Payments News happens, this post is updated. For job opportunities available for payments professionals, visit Employers looking to hire payments professionals can post their job openings there as well.

March 16, 2010

New White Papers from Smart Card Alliance Transportation Council

The Smart Card Alliance Transportation Council has announced the availability of two new white papers to help transit agencies who are planning to upgrade their fare collection systems. The white papers are: "Planning for New Fare Payment and Collection Systems: Cost Considerations and Procurement Guidelines" and "A Guide to Prepaid Cards for Transit Agencies". READ MORE »

First Data, Tyfone Partner for MicroSD-based Mobile Payments

First Data Corporation has announced an agreement with Tyfone to provide SideTap micro secure digital (MicroSD) memory cards equipped with Tyfone’s patented technologies to enable most mobile phones with a memory slot to function as a mobile contactless payment device. READ MORE »

Headline News - March 16, 2010

Note: Throughout the day, as Payments News happens, this post is updated. For job opportunities available for payments professionals, visit Employers looking to hire payments professionals can post their job openings there as well.

March 15, 2010

UK Cards Association Announces New Rights for Credit Card Customers

The UK Cards Association, representing the credit card industry in the UK, has announced a joint commitment with the UK Department for Business, Innovation & Skills (BIS) as a result of its consultation “Review of the Regulation of Credit and Store Cards”. According to the association, "the credit card companies are committed to supporting developments which are demonstrably in customers’ interests – making sure that customers are in control of their own finances." READ MORE »

Headline News - March 15, 2010

Note: Throughout the day, as Payments News happens, this post is updated. For job opportunities available for payments professionals, visit Employers looking to hire payments professionals can post their job openings there as well.

March 14, 2010

Competition and Regulation in Card Payments - Australia

In a speech titled "Competition and Regulation in the Card Payments Market" given Monday in Australia by Malcolm Edey, Assistant Governor (Financial System) of the Reserve Bank of Australia to the Cards and Payments Australasia 2010 Conference, Edey discusses the state of the Australian card payments market. He notes that because of how the card payment industry is structured, "competitive discipline on interchange fees has been weak" and then reviews the actions taken by the RBA - as a "reluctant regulator" - to deal with interchange fees.


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