In keeping with the payments theme, here is a classic interpretation.  Give the product for free and charge for the value at the point of interaction.  In this case a 3% fee on transactions.  In return the user gets the reporting, and a “web-based expense manager and uses cellphone cameras to upload pictures of receipts to match against purchases”. Netbanker:  Expensify Launches Decoupled Credit/Debit Card Using Prepaid Model To cover the extra interchange and create some revenue for itself, Expensify levees a 3% transaction fee on the cardholder. Although, the card is otherwise relatively fee-free, that’s a significant surcharge. Why … Continue reading Expensify is a good example of re-defining payments

I sense there are big changes afoot in the payments industry in Canada.  Translated that could mean changes in pricing, which in turn would mean changes for consumers.  Those changes might be positive or negative, but either way are enormously significant for Banks.  Interac seeks shift to for-profit status Mr. O’Connell fears Interac risks falling behind as the industry rapidly innovates. There are already products, such as MasterCard’s “tap & go” PayPass, that he would like Interac to be keeping up with. “The payments market is evolving every day,” he said. “It’s not just the U.S.-based credit card companies. You … Continue reading Payments, interchange, competition and … … Credit Unions?

Before 1996, and the advent of online banking Banks made money from bill payment.  Each bill paid required a cheque that incurred service charges, or an in branch payment, that incurred a fee.  No more. Online bill pay to cost US banks $1bn by 2010 – TowerGroup The provision of free online bill payment services to retail banking customers will cost the US financial services industry $1 billion by 2010, according to research from TowerGroup. The research house estimates that nearly 24 million Americans currently use electronic bill payment and presentment services (EBPP). Usage is increasing at a compound annual … Continue reading Online bill pay represents a huge cost, that will drive irrational Bank behaviour

Had an interesting conversation today with an executive of a Credit Card issuer. The topic (one of many) was interchange in Canada. Apparently there is discussion about government regulation on interchange, as we have seen in Australia, and beginning in the US. My facts are limited here, but something to watch for is the unintended impact. This quote from an earlier post referred back to the Globe and Mails comment that interchange essentially funded rewards programmes. Interchange and how it is the next new problem for consumers in Canada « CommunityLend blog Banks take in an “interchange” fee, which is … Continue reading Canadian government intervention on Interchange and the impact on rewards

In a timely post while the payments meme is developed, Jim at netbanker discusses two new offerrings that go some way to take a payment oriented view for the customer. Frost Bank Momentum Account Combines Reward Checking and Personal Financial Management (NetBanker) The Innovations Besides the DIY APY gimmick, the new account is noteworthy because it incorporates goal-oriented savings and transaction tracking into the interface. Users can allocate funds to one or more savings goals and setup automated transfers to the savings sub-accounts. The interface also includes budget categorization features using the folders metaphor. And the usual charting and graphing … Continue reading What is the difference between a payments oriented view and a traditional account oriented view?

Payments have been bandied around as the next big thing at Banks, and several large Banks have appointed Payments Heads.  Summary:  The payments person is embedded in the technology side of the business, and is restricted to viewing their mnadate from that perspective.  I have been studying reports from Deloitte in their financial services research area.  The theme in this quote is agonisingly true about most things in Banks, and certainly in payments. At most banks, payments processes are separated and siloed by product—credit cards, debit cards, checks, ACH transactions, and wire transfers are each supported by independent databases and … Continue reading Payments – the impossible dream for Banks?

Payments News makes a point that is becoming consequential in strategic terms for Banks. Mobile Payments = cheap remittances for the unbanked. Yet the ‘banked’ continue to pay high fees … hmmmm Payments News: A Look at Orange Money – May 07, 2008 As we’ve seen previously with M-PESA in Kenya, the mobile operators are focusing much of their mobile payments initiatives on markets where a large majority of the population is unbanked. Continue reading Mobile operators are focusing their payments initiatives on … unbanked