A Canadian telco has caused some waves with a request to government to charge a 3% fee to those paying bills by credit cards. Canadian telco bills already tend to be high by international standards, and consumers are feeling the pinch of inflation.
When was the last time a big contender arose to the traditional credit card? Is the barrier of entry of getting businesses to adopt too high given businesses dislike the fees?
How do fees compare for different businesses or different countries?
Are there now convenient alternatives? How is PayPal paid?
I don’t know about JCB/Discover, but don’t UnionPay cards and mobile payments work in Canada?
In any case, even if it is not a duopoly, the question is whether or not there is collusion to inflate fees. I.e., is 3% “fair”? This link claims Canadians are near the top at being ripped off, closely followed by the United States. France and Hungary had low fees. So it seems that government regulation can indeed mitigate this problem.
I haven’t worked retail for 30 years, so I don’t know, but no Canadian financial institution issues anything outside of Visa and Mastercard (all the banks) and Amex (Amex itself and ScotiaBank). Even Diners Club is now a Mastercard issuer.
Can’t you just write a check and mail it to avoid the fee (or have the bank send them a check), or drive down and pay in person with cash? Since it’s presumably to their advantage to have people pay with their credit cards, if enough people stop doing that and instead pay more expensively, they should eventually get the message and drop or reduce the credit card fee… but to answer your question, nobody wants to go up against Visa, MasterCard, or Amex since they essentially own the business. Discover has been trying to make a dent in the US, but I think is still a distant 4th behind the others… although I haven’t checked in a while.
Sure, but then you don’t get the credit card points and you assume the company using the pre-authorized payment doesn’t screw it up like my car lease when they took 6 months of payments out at once.
UnionPay is a major Chinese credit card brand, and issues cards in a number of other countries, as well (nearly all of them in Asia). They apparently have a reciprocal acceptance agreement with Discover, which helps their cardholders use their cards in the U.S., but I don’t believe that they actually issue UnionPay cards in the U.S. (or Canada), and I don’t know how widely they’re accepted in Canada.
Cost of entry, I suspect. Visa, Mastercard, and Amex have spent 50+ years building their acceptance networks with retailers, and their partnerships with banks; Discover’s been trying to do the same for 40 years, and is still a distant fourth in the market.
One of the knocks on Discover, especially in their early years, was “but I can’t use it at the stores where I shop.”
So if Google Credit came out offering half the rate they couldn’t stomach the cost of entry? Probably they see cell phone payments and banking, supposedly popular in Africa, as the future?
Ask Paypal why they’re not out there with a “Paypal card”. They’re already deeply in this very business and are about as deep-pocketed as it’s possible to be.
Exactly. There are plenty of “Silicon Valley disruptors” that are operating in the payment space (PayPal, ApplePay, Venmo, Zelle, etc.), but none of them, AFAIK, are extending credit directly to consumers.
And, even Mastercard and Visa aren’t directly extending credit to consumers – it’s the banks that are issuing those Visa cards and Mastercard cards that are actually extending credit. Visa and Mastercard (and Amex and Discover) are operating the payment-processing systems that connect the retailers to the issuing banks.
You can absolutely get a PayPal credit card…but it’s a Mastercard.
But Google has Google Wallet (formerly Google Pay) which actually works at many places (where NFC works), which would seem to give them an in to extend credit themselves if they wanted to.
But they’d instead rather require you to load your account from the existing credit companies, allowing them to take the financial risk that you don’t pay it back, rather than them. That seems to me to be the actual big factor.
Another thing to remember is that you’re dealing with people who have been loyal to a particular company and used their products for decades. That’s a lot of inertia to overcome just to save a few bucks.
If you could tap into the 18-25 demographic who either don’t have or haven’t used a credit card from one of the majors, perhaps there’s an opening there… but I still think it’s a long shot with the cards stacked against you (pun intended).
If Bill, Warren, Jeff, and Elon haven’t gone after that business, what makes you think anyone else can?
You might as well say no one could match the mighty power of Blockbuster or powerful local taxi syndicates. I’m not saying it is easy or practical - I don’t know. But these big players also haven’t gone into thousands of other business categories. But there is still money in fast food, to name one.