Courtesy of Aneace, here is a paper on the evolution of the payment systems.
Aneace’s Blog: The Merchant-Bank Struggle for Control of Payment Systems
…… article written by attorney Adam Levitin, titled The Merchant-Bank Struggle for Control of Payment Systems, published in the September issue of the Journal of Financial Transformation.The article reviews the factors behind the struggle between merchants and banks, and explores the potential impact of new payments technologies and structural changes such as MasterCard’s IPO.
The conclusion in the paper, is that two broad forces are at play that are changing the payment landscape.
- critical mass of large banks, creating the opportunity to pull out of the networks (eg Bank of America as reported in Bankwatch back in April)
- technological developments, sprouting new internet payment models, eg Paypal, Google checkout, Alibaba, 2Checkout.
Here is the papers conclusion.
Conclusion
Antitrust suits present a significant short-term threat to MasterCard and Visa and are spurring the reshaping of the U.S. payments industry. In the longer term, however, the antitrust threat may not particularly matter, as the growth of national bank brands has created the possibility of large banks splitting off and forming their own independent payment networks, while developments in payments technology and Internet commerce have created a competitive threat to MasterCard and Visa. The ultimate outcomes of these developments are uncertain, but one thing is not: the payments industry will look very different in a decade.
Levitin, Adam Levitin, “The Merchant-Bank Struggle for Control of Payment Systems” . Journal of Financial Transformation, Vol. 17, September 2006 Available at SSRN: http://ssrn.com/abstract=904183
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