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Bitcoin Craze Generating Big Profits For Some [2023 Update]

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Bitcoin is a topic that most people who spend time on the Internet have heard about. A Bitcoin is not a tangible coin like traditional currency. It is a virtual currency that can be bought, sold and mined electronically. For Andreas Kennemar and Marcus Erlandsson, an idea involving Bitcoins turned out to be beyond profitable.

Mining Computers

In the short span of four days, Kennemar and Erlandsson earned $3 million in revenue. How did they do this? KnCMiner, their company, does not actually own the virtual coins or trade them. Instead, they crafted a computer that is designed to mine the currency online. At $7,000 per unit, these computers are certainly more of an investment than the average desktop or laptop. During the second week of November, KnCMiner sold off all of its inventory when Bitcoin prices were skyrocketing. In a record four minutes, the men made an impressive $600,000.

How To Mine Coins

At first mention, the idea of mining a virtual currency may sound like an easy treasure hunt game to the average person. However, the process is very complex. Without the right electronic tools and equipment, mining a Bitcoin is difficult for a regular computer. There are several cryptographic puzzles that must be solved, and the average computer does not have the ability to compute them. This is where the two men who created the mining computers developed their idea. They used a special chip, which is called an Application-Specific Integrated Circuit or ASIC.

To build a coin, a computer has to calculate an encryption problem that is called SHA-256. The graphic card or ASIC does the processing, and the algorithm must be solved in order to create new coins. The process is commonly called solving a block. When a computer is successful in creating new Bitcoins, it will be verified with other processing computers in the network. The first person to solve a new block is the one who receives the coins. Currently, there are 25 Bitcoins per block with a limit of 3,000 per day before it becomes significantly harder to produce more coins.

The idea of this virtual currency certainly provides opportunities for creative people to make money, but some detractors also argue that the system is flawed or unsustainable.  If anything, the value of a Bitcoin has certainly proven volatile.  Here at “The Official Merchant Services Blog” we’ve covered a variety of aspects concerning virtual currency. We delved into tokenization just recently, which facilitates the processing of payments by creating virtual tokens instead of storing cardholder data in a way that is susceptible to breaches and hacks. We have also covered aspects of micro-transactions and how video games embrace both the concept of virtual currency and the sale of virtual items for real currency. Bitcoin and the ongoing developments in Bitcoin mining takes these concepts to a whole new level of depth and economic intrigue. We will continue to monitor and report on the Bitcoin story as it unfolds.

The Death of E-Commerce? [2023 Update]

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I just sat down at my desk and took a few moments to read Antonio Regalado’s fascinating column on E-Commerce from MIT Technology Review. I recommend it to anyone who runs a business, or really anyone who plans to buy something in the next month or two — you know, during the Holiday Shopping Season.

It’s That Time of Year Again

With that holiday shopping season right around the corner the media spotlight on E-Commerce is about to get dialed up a few notches. The standard media grind of finding a new story to keep things fresh, yet rehashing the same old topics over and over again, is really quite fond of the E-Commerce tale since it basically hits every mark needed in a story this time of year. It’s well trod ground (retail sales figures during the time of year when people flock to shop retail), it’s fresh and flashy (buying with a smartphone is the new “it” thing) and it’s easy to write about (everyone’s got a smartphone and in between texts can probably offer an opinion about the story).

So there’s going to be a flood of “E-Commerce, it’s not just for kids anymore!” style pieces written, along with chart after chart of how many billions of dollars are being spent on products through the whiz bang-up new gimmicks of smartypants phones and interwebs tubes (it’s not a truck, but it powers a fleet of delivery trucks!)

It’s this pending recycle of the news cycle that Regalado’s piece really underscores. It’s starts with the subhead of the article, “E-commerce is an idea whose time has come and gone. Here’s why.” A bold statement when placed up against the pending flood of stories that are going to tell us that E-Commerce is (still) the next big thing.

But that’s the hook of Regelado’s article. And it certainly worked its magic on me and got me to read it.

More Than Meets the Eye

Regalado’s point isn’t that E-Commerce is done. It’s more that it’s becoming part of the everyday fabric of retail business. So he’s saying that E-Commerce has been merged into a total shopping experience and is no longer a new gimmick.

The article really slams this point home when it quotes Chris Fletcher, a research director at Gartner (who we here at HMS have used data and graphics from on this very topic). Fletcher told the MIT Technology Review’s Business Report, “we should stop calling it E-Commerce and call it just commerce,” and suggested that it’s really just a part of the shopping experience now.

This quote called up more than a few variants of the corny joke, “In China, they just call it food.” But the point is very well taken this year, and is something we’ve been alluding to for two years now at Host Merchant Services: The whole shopping experience has blending together with Online and Brick and Mortar since the very beginning.

Days of Future Past

This has really obvious but powerful ramifications for our company. As more and more people just accept online shopping as much a part of the process as window shopping or catalog shopping, the amount of credit and debit card transactions continues to increase. Those are the two most common methods of payment in this online environment. And so as the business evolves to the point where popping into a Macy’s ends up auto-texting you a free discount code on your next Macy’s purchase, payment card transactions become the norm.

Keeping an Eye on Heat Mapping

Oh and Regelado’s article really dives into that bit with your location spawning discounts:

” Threatened by the growth of low-cost online merchants, traditional retailers are reacting by following customers onto the Internet. Macy’s does it as well as any. On its website, it installs 24 different tracking cookies on a visitor’s browser. On TV, it runs ads with Justin Bieber that urge millennials to download its mobile app, which tells them which of the chain’s stores is closest to their location. Once inside, they can use the app to scan QR codes on a pillowcase or a pair of shoes. Online orders now ship from the backrooms of 500 Macy’s stores that this year began acting as mini distribution centers.”

Omnichannel marketing is the buzzword associated with this. But it’s something we’ve been discussing at HMS for awhile now. Our partnership with Barclay’s Mobile app opened this slick marketing tactic up to us ages ago. It’s really quite clever. The business uses its connection to your phone (and thus your own transaction history, your GPS location, as well as data that it can find in various places like social media) to track your buying habits.

I remember the first time the heat mapping aspect of Omnichannel Marketing was explained to me by HMS Tech expert Ken Hemmel.

He described a system where I’d be walking along on Main Street in Newark, which was where the Barclays app was being targeted, and I’d pop into a restaurant. I’d buy a meal and have a glass of a particular wine with that meal. The information would then prompt my phone the next time I walked past a wine and spirits store that was participating in the program. And I’d be given a coupon code to save money on a bottle of that kind of wine I had with my meal. This would combine transaction history, with GPS location and turn into an aggressive marketing tactic to get my business.

A Whole Store in Your Pocket

Another salient point Regelado’s article made really resonated with me personally. The article cites US Census economic data and states that only 5.2 percent of US retail purchases were made online in 2012. But then the article cites the effect of online research, noting that 80 percent of BestBuy customers said in a survey that they already searched for price information online before making a purchase in person. And that a third of them do so on a phone while inside the store.

So the last two purchases I made at BestBuy were an HD TV, which I searched for information on while in store, and a computer which I was shopping for online before I went there. I fell right into those statistics. I wanted to comparison shop and read reviews before making the purchase and had the device right there in my hand that let me do exactly that.

The only thing that held me back from ordering either  of these items completely online was impatience. I wanted the item that day. Which is exactly what Relegado’s article also gets into:

“But now [Amazon] and other Internet companies, including eBay and Google, are investing in same-day delivery—getting goods to people just hours after they order them. With their drop boxes and fleets of delivery cars, they’re bidding to eliminate one of physical retailers’ main advantages: immediate gratification.”

The suggestion is that technology is pushing retailers to evolve. They embrace social media, and online power, and create a shopping experience once again tailored to meet the needs and convenience of their customers.

Been There, Done That?

It reminds me of Warren Ellis and Darrick Robertson’s groundbreaking comic book, Transmetropolitan. Set in a Bladerunner-on-acid style future and revolving around a pastiche Hunter S. Thompson-inspired Gonzo journalist named Spider Jerusalem, the comic had a very humorous but also telling take on marketing and advertising in our near future. It suggested neural advertising bombs delivered directly to our brains, tracked by our own viewing habits, to offer us the products we’d be most interested in. As deft and powerful as that future marketing blitz was shown to be in the imaginary world of Transmet comics, the reality is we’re about to be in on the beta test of that entire concept with the way retail is evolving through E-Commerce.

Swipe Fee Suit Ongoing After Fairness Hearing [2023 Update]

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A $7.25 billion settlement relating to credit card interchange fees continues to encounter stiff opposition from a number of major retailers and several significant retail trade associations.

Case History

The antitrust case against Visa, MasterCard and several issuing banks stemmed from a dispute relating to the percentage of credit card transaction fees that retailers must remit to the credit card processing network. The fees generally range from 1.5-3 percent and are shared with the bank that issued the card.

Also known as “swipe fees,” these charges serve to underwrite the supporting infrastructure that allows businesses to accept and process credit cards. Large retailers and supporting associations have repeatedly complained about the costs associated with accepting credit cards and the fees for merchant services.

These grievances resulted in a number of lawsuits filed in 2005, which were eventually consolidated into a single case known as the Payment Interchange Fee and Merchant Discount Antitrust Litigation.

There were 139 parties involved as plaintiffs, and the case was active for over eight years. In July 2012, a settlement was reached that provided $6 billion in damages to affected retailers and another $1.2 billion for a temporary reduction in interchange fees. As a further concession, Visa and MasterCard eliminated certain rules for merchant services that prohibited surcharging, which is a practice that allows retailers to recoup credit card costs by passing them on to the consumer.

Opting Out

Almost immediately, opposition to the swipe fee settlement began to emerge. The primary objections centered on the belief that the agreement does not provide any meaningful reforms to the current model. Many merchants believe that market forces will not allow for credit card surcharges since consumers will object to the added fees. Other retailers oppose the stipulation in the agreement that prohibits future swipe fee lawsuits.

As a result, major retailers such as Target, Nike, Home Depot, Lowes, Starbucks and Best Buy ultimately opted out of the settlement. Major trade organizations, including the National Restaurant Association (NRA), have voiced significant opposition to the agreement. In fact, the NRA strongly encouraged its constituent members to reject the settlement and highlighted the potential negative impact it could have on the emerging mobile payments market.

Many retailers ultimately declined to participate in the settlement. Since the total number merchants who opted out exceeded 25 percent of the collective annual U.S. retail transaction volume, MasterCard and Visa could have elected to withdraw from the deal. However, they chose to continue with the process.

In September 2013, a fairness hearing was held in U.S. District Court under Judge John Gleeson that allowed dissenters to present final arguments. Gleeson is expected to issue a decision on the settlement sometime in mid-January 2014.

Recent Developments

After assessing their options, Target Corp. and 17 other retailers filed a separate lawsuit against Visa and MasterCard in May 2013. The plaintiffs charged that the banks and credit card companies have engaged in an “illegal and anti-competitive scheme.” They contend that the Visa Check Swipe Fee settlement did not adequately address the basic issues of the original case.

In the most recent action relating to the new litigation, Visa and MasterCard argued in federal court that the pending antitrust action initiated by Target Corp. is prohibited under the terms of the July 2012 settlement deal. The defendants contend that the retailers have misinterpreted the terms of release relating to the previous case for the sole purpose of instigating additional litigation.

MasterCard and Visa strongly reject the plaintiff’s arguments and contend that the Visa Check swipe fee settlement case preempts any new action relating to interchange fees, which they contend were adequately addressed under the previous settlement.

The Saga

To review the full extent of this ongoing saga, you can read our previous coverage of this settlement:

  • The Big Cash Comeback
  • Don’t Call it a Comeback
  • NRF Opposes Interchange Settlement
  • Interchange Settlement Nears Preliminary Approval
  • Merchants Appeal Key Part of Interchange Settlement
  • Interchange Settlement Given Preliminary OK
  • Challengers Awaiting Final Approval
  • What Does the Future Hold for Interchange

iCloud Keychain to Now Store Credit Card Data [2023 Update]

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Apple’s recent software update includes a new product called the iCloud Keychain. With the feature, consumers can save sensitive information in a secure online file. Specifically, Keychain will save passwords and credit card information for all of their Apple devices. The program also helps Internet users create safer passwords.  Given the new functionality allowing users to store credit card data and synchronize with the cloud, we thought this functionality would be of particular interest to our customers and blog readers.

Keychain Details 

The Keychain service operates on Safari in iOS as well as OS X Mavericks. Once it has helped a consumer select a secure password, it will store the information and synchronize it to the consumer’s iOS and Mac units.  The software upgrade also makes credit card processing easier for consumers as Keychain saves the user’s credit card number and expiration date. To abide by MasterCard and Visa regulations, the program is unable to store the Card Verification Value, or CVV, code.

As a result, consumers will still need to input this information manually. Users should keep in mind that the software can only operate in Safari on Mac. Therefore, users of Chrome or FireFox will need to use a different password storage provider. In addition, consumers must have the iOS 7 upgrade installed on their devices.

Installation Overview

While installing the OS X Mavericks upgrade, the system will automatically ask the user if he or she would like to establish iCloud Keychain. When the user approves the setup, the program will direct him or her through the security key creating and linking process. If consumers prefer to establish the program manually, then they can access Keychain through the iCloud settings screen on a Mac device. Once a user has accessed the program, he or she will need to enter the password information manually into the system for the Apple program to save it. Keep in mind that other devices can be added to the program. However, the system will require approval for each extra unit. Once Keychain receives authorization, it will automatically begin updating on that unit. If a user decides to remove Keychain from his or her device, then the cancelation procedure is easy to complete. To remove the program, just click on the settings option and turn off the “Approve with Security Code” feature. Users who change their mind can easily reactivate the program.

Keychain Offers Convenience

Credit card processing is easier for consumers who have Keychain on their iOS and Mac devices. The Apple program is secure and helps users create better passwords to safeguard sensitive information. Keychain is a system feature that provides extra security and overall convenience.

How to Save Money on Credit Card Processing Fees

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Here at Host Merchant Services we guarantee to save our customers money every month on their credit card processing. We understand that some of you are wondering how we do this! Transparency is a key cornerstone of our customer service values, so we have no problem sharing our secret formula and show everyone out there exactly how we carve out superior savings for every single one of our customers. We believe that when you get your statement every month, you should understand every item, and it should match what you were promised in the sales process. One of the first things to understand when switching to Host Merchant Services is we utilize the most cost effective and fair pricing available in credit card processing. It is called “interchange plus” or “cost plus pricing.” Interchange is a set of rates and fees determined by the card associations (Visa, Mastercard, and Discover). What this means is that our merchants are able to clearly see what interchange categories they qualify for. Here are a few different interchange categories that merchants pay with the same consumer visa credit card. Keep in mind each interchange category has a percentage and a dollar amount included in the category.

Supermarket Credit 1.22% + $0.05
Small Ticket (Transactions under $15) 1.65% + $0.04
Standard Retail / Restaurant 1.51% + $0.10
Charity 1.35% + $0.05
Service Station 1.15% + $0.25
e-Commerce / Mail order & Telephone order 1.80% + $0.10

These examples are based on interchange plus pricing. They also don’t include processor markup, and we have the lowest in the industry! There are other types of pricing that processors will use. You may encounter three-tier pricing (1.79% Qualified, 2.49% mid-qualified, and 3.29% non-qualified) for example. Some merchants are priced flat rate (2.9%, or 2.75%) or flat rate plus surcharges. There is also the dreaded enhanced bill back! Once you understand your pricing and category you need to look at how you are accepting your credit cards. Credit cards that are taken face-to-face (card present) often cost less than cards that are taken over the phone or on the Internet (card not present). For example, retail swiped transaction of 1.51% versus an e-Commerce transaction of 1.80%. Card associations justify this increased interchange rate due to transactions not being face-to-face. The next step in saving money is learning how much money is currently being spent on average to take in each dollar on credit cards. This is called your effective rate. This is calculated by totaling all the money you are paying in fees divided by the total amount your business processes in sales and refunds. For example a merchant who pays $300 in fees to bring in $10,000 in credit cards has an effective rate of 3.00% ($300 / $10,000 x 100 = 3.00%). A few other pieces of information are important to solving the puzzle. The average ticket or average transaction amount is also critical to understanding your rates. The reason being is that a $.20 transaction fee is not a substantial amount of an average ticket of $100 ($.20 / $100 = 0.20%). However, take that same transaction fee on an average ticket of $10 ($.20 / $10 = 2.00%). This goes to show that merchants with larger average tickets pay lower effective rates on average. Lastly we want to look at other fees; many processors will charge monthly fees, statement fees, administrative fees, regulatory and product fees, PCI fees, and annual fees. Host Merchant Services will help you save money on these fees as well! You can learn more about this process through our Official Host Merchant Services Road to Savings Infographic. The best way to start the process is to have one of our industry experts analyze a current merchant statement. We will walk you through the confusing process by explaining what you are currently paying versus what you would pay with HMS. Along with the potential to save hundreds to thousands of dollars each year on your credit card processing, we’ve upped the ante with our new $100 Challenge.

Call us today at (877) 517-4678 and let us design a solution that dramatically improves your bottom line – we guarantee it!

AlignCloud and HMS partner up

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Host Merchant Services, an industry leading provider of payment processing and e-commerce services for small and medium businesses, announced a promising new partnership with cloud consulting firm AlignCloud. This partnership is the product of extensive research and collaboration and the bold new alliance  represents an exciting opportunity for customers to benefit from the combined expertise of these two companies.

AlignCloud tailors services for cloud providers and end-users alike. From cloud readiness assessment planning to cloud vendor management, AlignCloud provides indispensable services for all cloud customers. For cloud hosting providers, AlignCloud can help providers train sales staff, draft sales plans and fully engage with Web marketing and SEO. With its focus on the cloud and web hosting market, AlignCloud is a natural referral partner for Host Merchant Services.

HMS CEO Lou Honick has aptly summarized the buzz surrounding this collaboration. “Our expertise in e-commerce, payment cost optimization, and security meshes perfectly with AlignCloud to create compelling offerings,” Honick said of the AlignCloud partnership. AlignCloud clients can now seamlessly access secure, reliable merchant services, PCI compliance solutions, and e-commerce.

In the business world, demand for cloud services has reached an all time high. As mobile devices become more important for business, public worries about information security keep pace. Cloud Hosting is a type of hosting platform that allows customers powerful, scalable and reliable hosting based on clustered load-balanced servers and utility billing. Web hosting services allow individuals and organizations to make their website accessible via the World Wide Web.

For AlignCloud’s customers, HMS has designed services to insure absolute peace of mind. According to AlignCloud CEO Stacy Griggs, the program will provide clients with “lower rates and better service for credit card processing, mobile payments and merchant services.” The experts at HMS combine technical knowledge with uniquely dynamic customer service. Through expertise in data security and fraud reduction, Host Merchant Services promotes more confident commerce, both for businesses and customers alike.

A cloud hosted website can be more reliable than alternatives since other computers in the cloud can compensate when a single piece of hardware goes down. Also, local power disruptions or even natural disasters are less problematic for cloud hosted sites, as cloud hosting is decentralized. Cloud hosting also allows providers to charge users only for resources consumed by the user, rather than a flat fee for the amount the user expects they will use, or a fixed cost upfront hardware investment.

For Host Merchant Services, the partnership with AlignCloud is part of their successful strategy to partner with the web hosting and cloud services industry. Companies like AlignCloud can better serve clients by integrating credit card processing into their offerings. Through Host Merchant Services, AlignCloud customers will experience hassle-free credit card processing with 24x7x365 hour technical support and responsive website.

Clients of AlignCloud can also earn extra revenue by referring their customers to the program.

Payments And Customer Loyalty

Big Data, Payments And Customer Loyalty – Part One [2023 Update]

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Businesses in many industries are contributing to the rise of Big Data, a confluence of modern data-gathering mechanisms. Larger hard drives and faster CPUs enable people to gather and analyze vast collections of commercial information. Though Google is the largest and most prominent data-gathering operation, retailers like Amazon and Walmart famously gather and analyze enormous amounts of customer data. On a smaller scale, companies of all sizes are utilizing similar procedures. The Big Data revolution is refining the consumer experience in ways that are mostly positive and promising, albeit with looming privacy concerns. For example, modern analytics enable better fraud detection in credit card processing and payments, as well as enhanced marketing and behaviorally targeted promotions to customers.

One successful recent IPO demonstrates the growing relevance of cutting-edge data analysis. Tableau Software has impressed investors with an online platform that turns various types of data into visualizations and charts. Doubling its initial stock price in less than two months, Tableau Software has amply demonstrated the importance of information analysis for diverse industries and organizations.

Throughout the merchant services industry, companies are using analytics to refine systems in ways that are appealing to businesses and consumers alike.

Advances bring greater access to customer information and more ways to analyze that information. This evolution is complemented and affected by the remarkable growth of mobile commerce. For example, consumers who use mobile wallet software increasingly insist on impeccably safe, secure credit card processing. Modern analytics make it far easier to identify suspicious patterns indicating fraudulent activity. Better fraud prevention inspires consumer confidence and leads to greater participation mobile commerce. Customer participation enables the proliferation of more effective, targeted, and individualized marketing and offers. In turn, more transactions lead to larger information sets and further refinements of payments technology. This type of feedback loop is merely one example of the game-changing effects of the Big Data revolution.

Stay tuned for part 2 of this series as we take a more in depth look at ways that big data is changing payments.

Can Durbin Debit Rates Go Even Lower

Can Durbin Debit Rates Go Even Lower? [2025Update]

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A new U.S District Court ruling could lead to major changes in debit card processing fees. Will the Durbin debit rates go lower with this? Let us understand.

On July 31, U.S. District Judge Richard Leon swept aside the Federal Reserve‘s 2011 implementation of the Durbin Amendment. Passed in 2010, this amendment to the Dodd-Frank law was intended to limit the upward trajectory of debit processing rates. According to Leon, the Fed’s 2011 regulations directly counteracted the original intent of the Durbin Amendment. Though the Fed capped the base rate for debit processing fees at 21 cents, they raised debit rates for transactions under $12. Essentially, the Fed lowered the debit price for large transactions while raising them substantially on small transactions.

Can Durbin Debit Rates Go Lower?

Durbin Debit Rates

In general, debit card caps are highly advantageous for retail businesses. However, the current implementation of the Durbin debit amendment creates grave concerns for many retailers. It is sensible to lower debit card interchange fees at a time when many retail companies are struggling with low consumer demand. Months will pass before the nation sees new, concrete debit processing rules. In the meantime, the response to Judge Leon’s ruling starkly illustrates a growing conflict between the retail industry and major banks.

In this struggle to define the costs of merchant services, both sides claim to represent the best interests of the public. However, the banking industry is so politically influential and entrenched that it is hard to see this industry as truly vulnerable or consumer-focused. Retailers are achieving broader public support as they tout their intentions to lower costs for ordinary Americans.

To be fair, it is demonstrably true that banks could lose enormous profits in the wake of Judge Leon’s ruling. Undoubtedly, the banking industry will pass some of these costs on to consumers in the form of higher fees and tighter restrictions. A strong, profitable American banking industry is vital for the United States and the global economy. 

At the same time, history has shown that the banking industry is far less volatile than the retail sector. When banks are in danger of failing, they can often use their political influence to gain unique concessions and loans from the government. In stark contrast, retailers must stand on their own during problematic times. In light of this power imbalance, the public may well benefit from retailer-friendly debit price controls.

The new ruling on Durbin debit rates represents a fascinating turn of events. However, only time will tell if Judge Leon will have the final word in Durbin implementation. The Federal Reserve and large banks have many more tools at their disposal in their quest to control the state of debit processing fees.

What Is the Durbin Amendment

The Durbin Amendment is a part of the Dodd-Frank Wall Street Reform and Consumer Protection Act, a law enacted in 2010 in the United States. It was named after Senator Richard Durbin, who played a role in its development. This amendment primarily focuses on the fees that merchants pay to banks for processing debit card transactions, known as interchange fees.

What Is the Durbin Amendment

The key features of the Durbin Amendment are as follows

Regulation of Interchange Fees: The Durbin Amendment introduced regulations to limit the interchange fees charged by banks to merchants, for processing debit card transactions. The aim was to make these fees more reasonable and transparent.

Exemption for Smaller Financial Institutions: These regulations specifically apply to institutions that surpass a certain asset threshold. Smaller banks and credit unions generally do not have to follow the restrictions on interchange fees.

Choice of Network Routing for Merchants: Another objective of this amendment is to promote competition among payment card networks. It allows merchants to select which network they prefer for processing debit card transactions. This provision encourages competition. May potentially reduce costs, for merchants.

Prohibition of Exclusive Network Agreements: The Durbin Amendment prohibits card networks from imposing agreements that would restrict merchants from routing their transactions through networks.

Measures to Protect Consumers: The amendment included provisions that aimed to strengthen consumer protection. One of these provisions required issuers to offer consumers a choice, between two payment card networks that were not affiliated with each other for each debit card. This gave consumers options and flexibility.

Challenges in Implementation

The implementation of the Durbin Amendment faced some difficulties, which sparked debates about its effectiveness and potential unintended consequences. While some believed that it successfully achieved its goal of reducing interchange fees others had concerns about effects on smaller banks and financial institutions.

Impact on the Debit Card Industry

The Durbin Amendment had an impact on the debit card industry by changing the dynamics of interchange fees and fostering competition among payment networks. It continues to be a regulation in the United States influencing the relationships, between banks, merchants and consumers when it comes to debit card transactions.

MCX, Paydiant, and the Battle Over Mobile Wallets [2023 Update]

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The mobile Internet revolution is rapidly changing the longstanding status quo in the payment processing industry. As more people purchase items with their mobile devices, the public is demanding more options and greater security from transaction processing companies. For many long years, big banks and processing companies like Visa and Mastercard faced little competition and were free to change processing fees at will. Today, the upstart MCX network (Merchant Customer Exchange) is making a strong bid to compete in e-wallet services. This consortium of retailers recently added Kohl’s  to its roster of members. The cooperative already includes major players like Walmart, Target and Best Buy. Formed in August 2012, MCX has stated its intention to better protect consumer data, lower processing fees and otherwise improve conditions for mobile shoppers.

In many ways, MCX represents the most forward-looking hopes of the retail industry. Though the network is not fully operational, industry watchers are fascinated by the ways that MCX could change the e-commerce  landscape. In its bid to create a viable alternative payment network, MCX seeks to emulate the success of Paypal, the most successful independent online transaction processor. With its focus on mobile purchasing, MCX shows a feel for the developing trends of modern commerce. As the battle over mobile payment fees heats up, many consumers aren’t aware of how their payment choices effect the underlying struggle for lower fees in the mobile commerce sector.

Increasingly, large banks and financial companies are bringing enormous resources to bear in their efforts to woo mobile consumers and prolong their dominance. While these large institutions are currently making concessions to secure their position in mobile payments, one could persuasively argue that more choice will lead to greater satisfaction for participants in mobile commerce.

MCX Logo

Of course, MCX faces an uphill battle in its quest to change modern payments. Major banks and Interchange processors have rallied around Paydiant, the mainstream platform for e-wallet services. Though far from perfect, Paydiant has won broad acceptance for its widespread relevance and ease of use. Over the next few years, the competition between MCX and Paydiant will represent one front in the all-out war to control and define mobile payments. At the same time, Paypal will likely make every effort to extend its commanding position into the mobile commerce sector. While Google Wallet has yet to make major gains in mobile processing, it is never wise to underestimate the potential of this groundbreaking corporation.

Every month, dramatic numbers of people start using mobile payments to purchase goods and services. Familiar with brands like Visa and Mastercard, many of these consumers will gravitate towards Paydiant. At the same time, MCX has hired media-savvy personnel to potentially launch their brand into global prominence. If any group has a real chance of changing the status quo of modern transaction processing, it is MCX.

Paydiant

Compared to monolithic financial companies, retailers are arguably better poised to meet the changing needs of modern consumers. Only time will tell which mobile processing network will achieve the same kind of dominance that Paypal has realized in online payment processing. Though consumers are fairly loyal to major financial brands like Visa, the new decade tells a tale of increased public hunger for technological innovation and greater choice. Whoever succeeds in dominating mobile online payments, it is likely that consumers will experience a new era of speedy, secure transactions. As mobile devices continue to revolutionize modern culture, people from all walks of life will learn to appreciate the ease and convenience of doing business through cell phones and mobile devices. Experts can only guess at how many middle-class consumers will ultimately execute most of their daily payments online.