Tempo Payments’ has made the decision to market its network to issuers under the “Decoupled Debit” product umbrella. The short term implications—competition for CapitalOne and the ability for other issuers join jump into decoupled debit with both feet—are quite evident. The long term implications are more intriguing, however.

The most successful “open” payment networks to date have been bank-centric—wholly or (at least) partially controlled by financial institutions. This was not always the self evident conclusion. Merchant oriented networks, closed and semi-open have always been on the landscape or at least the periphery. The overwhelming growth and dominance of Visa and MasterCard as bank-controlled entities have borne this out…much to the chagrin of many a merchant (ironically, Mallory Duncan of the Merchant Payments Coalition [MPC] testified to Congress yesterday about the evils of interchange…hope the bogeyman didn’t rear his ugly head on the Hill…).

So along came Debitman. A brilliant idea in my opinion, the company sought to create a competing network where merchants became the issuers. My argument to the MPC and like-minded groups has always been, “if you don’t like interchange, DO something about it!” [That would be something other than bitching about how unfair it is.] Debitman sought to do just that (if you can’t tell…I’m a big fan of action over rhetoric). But, ut never really took off. Merchants didn’t have the wherewithal or the desire to actually go through with it and become issuers. Debitman evolved to Tempo Payments last year, with a brand new management team but the same inherent strategy—create a merchant network from the existing POS infrastructure.

However…when CapOne announced its Decoupled Debit product Tempo immediately responded with a major shift in strategy, now catering primarily (it seems…) to banks/issuers, leaving the idea of a merchant network somewhere out there among the “valiant efforts and great ideas that just…never…really…made it.”

Does this signify the end of alternative networks focused on the merchant?

Is the only thing that merchants have left the ability to yell louder about how interchange is unfair?

I think so.

I think this means that merchant groups have no other viable alternative, and it’s strange because the ire against interchange has grown so much in the past 5-10 years. Maybe the bank-centric model works for all involved and all these complaints about interchange ARE just posturing for lower prices.

Imagine that…