Strike One for Retailers, But Still Up at Bat in the Payments Business

Earlier this week, a federal appeals court refused to expedite a merchant group’s appeal (http://www.bloomberg.com/news/2012-12-11/visa-fee-accord-preliminary-approval-appeal-is-rejected.html) of the recently proposed $7.25 billion settlement with Visa and MasterCard in a credit card related price-fixing case. A setback for merchants, but one that is unlikely to deter their persistence in advocating and working for change in the payments business.  According to Javelin’s newly published report –10 Trends for Financial Services in 2013 – in the coming year, merchants will continue active litigation efforts designed to address and control payment costs. Following the 2011 implementation of the Durbin Amendment, retailers have are continuing to recognize their ability to achieve broad influence and collective power.
In addition to driving litigation and regulation in 2013, retailers can also be expected to innovate to enhance their control of payments costs and the purchasing experience.  Although the traditional card networks have a significant hold on transaction volume today, the rapid evolution of payments and channels — particularly the introduction of the mobile channel — is enabling emerging options to gain market visibility and share. While traditional players are actively supporting a variety of mobile trials and emerging payment initiatives, merchant-supported alternatives will have the potential to attain a new position in this dynamic environment. Purchasing, loyalty, rewards and payment are naturally integrated transaction activities that are logically influenced — if not driven — by the merchant. Also, merchants have direct access to their customers and therefore have a significant opportunities to influence their payment choices and behavior. In the tightened economic environment that is expected to persist throughout 2013, merchants will have a strong incentive to continue to control costs and improve their margins.
In the face of these changes, Javelin’s 10 Trends for Financial Services in 2013
report suggests that stakeholders:
Remain well informed on merchants’ lobbying actions.
Maintain detailed metrics to justify positions and solidify competitive pricing initiatives.
Identify new ways to support merchant needs and reinforce the merchant value proposition around payments.
For more on the role of retailers and their increasing position in the payments business, see Javelin’s report –10 Trends for Financial Services in 2013.

Earlier this week, a federal appeals court refused to expedite a merchant group’s appeal of the recently proposed $7.25 billion settlement with Visa and MasterCard in a credit card related price-fixing case. A setback for merchants, but one that is unlikely to deter their persistence in advocating and working for change in the payments business.  According to Javelin’s newly published report –10 Trends for Financial Services in 2013 – in the coming year, merchants will continue active litigation efforts designed to address and control payment costs. Following the 2011 implementation of the Durbin Amendment, retailers are continuing to recognize their ability to achieve broad influence and collective power.

In addition to driving litigation and regulation in 2013, retailers can also be expected to innovate to enhance their control of payments costs and the purchasing experience.  Although the traditional card networks have a significant hold on transaction volume today, the rapid evolution of payments and channels — particularly the introduction of the mobile channel — is enabling emerging options to gain market visibility and share. While traditional players are actively supporting a variety of mobile trials and emerging payment initiatives, merchant-supported alternatives will have the potential to attain a new position in this dynamic environment. Purchasing, loyalty, rewards and payment are naturally integrated transaction activities that are logically influenced — if not driven — by the merchant. Also, merchants have direct access to their customers and therefore have a significant opportunities to influence their payment choices and behavior. In the tightened economic environment that is expected to persist throughout 2013, merchants will have a strong incentive to continue to control costs and improve their margins.

In the face of these changes, Javelin’s report suggests that stakeholders:

  • Remain well informed on merchants’ lobbying actions.
  • Maintain detailed metrics to justify positions and solidify competitive pricing initiatives.
  • Identify new ways to support merchant needs and reinforce the merchant value proposition around payments.

For more on the role of retailers and their increasing position in the payments business, see Javelin’s report – 10 Trends for Financial Services in 2013.

Category: Dynamic Payments

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One Response

  1. As you have noted, the mobile channel, will enable new options to enter the market. Not only are they able to enter the market and gain market visibility relatively easily, but they can do so very quickly as a few of the mobile applications have shown recently… particularly having to do with mobile wallets.

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