Credit Card Companies’ Sense of Entitlement Could Kill Mobile Payments
You don’t have to be a rocket scientist to realize that companies which issue credit cards are threatened by smartphones and the advent of mobile payments. We’ve already seen such companies band together for their own ISIS system to compete against the likes of Google Wallet, which from the get-go has been jumping through hoops to be able to function in a landscape largely under their control. Now one is spelling out plain as day about just what they want from companies building mobile payment solutions: money.
Visa’s CEO Charlie Scharf explained that he believes “it is totally appropriate” for companies like Visa to demand fees from mobile payment operators. While it’s hardly surprising to learn that he feels that way, it’s interesting to see it so plainly admitted.
Traditionally, the merchants pay any fees for credit transactions. From what Scharf is saying, he thinks it’s fair to keep charging those merchants, but also demand money from middlemen like Google.
Should credit card companies actually make good on such threats, that could easily be the end of mobile payments as we know them, before they even get a chance to take off; after all, the margins have to be razor thin, with Google only profiting from the advertising insight it gains, and fees of even a couple percent on each transaction could be untenable.