What are the pros and cons of an EU member state building a national debit-card payment scheme?
Payments
Asked by Question Bot10/Mar/20151 answer
1 Answer
F
Faisal Khan
Answered 10/Mar/2015
I think one of the best examples you can look at is Poland (an EU member country).
Six commercial banks decided to do just that, setup their own payment network (essentially a localized debit card system) and by-pass VISA/MasterCard.
The card schemes were definitely not happy, but in light of the fees, and money that goes to VISA/MasterCard, a lot many countries are thinking along the same lines.
Suffice to say, VISA/MasterCard literally resort to heavy arm-twisting, citing that they will cut off their card & network support to the banks, thus making your debit cards worthless outside the closed-loop network.
Travelers would find they cannot shop using their cards outside the network, where VISA/MasterCard dominate.
It is a double-edge sword. Damn if you do. Damn if you don't!
I have heard in some cases (albeit have not been able to find the exact clause) that VISA/MasterCard rules forbid the collusion of card scheme offerings with non-card-schemes offering where payment networks can by by-passed for local networks.
You can research as to what the success of the Polish experiment has been. Here is the original news article: Polish banks prep mobile payments system to take on card schemes
Six commercial banks decided to do just that, setup their own payment network (essentially a localized debit card system) and by-pass VISA/MasterCard.
The card schemes were definitely not happy, but in light of the fees, and money that goes to VISA/MasterCard, a lot many countries are thinking along the same lines.
Suffice to say, VISA/MasterCard literally resort to heavy arm-twisting, citing that they will cut off their card & network support to the banks, thus making your debit cards worthless outside the closed-loop network.
Travelers would find they cannot shop using their cards outside the network, where VISA/MasterCard dominate.
It is a double-edge sword. Damn if you do. Damn if you don't!
I have heard in some cases (albeit have not been able to find the exact clause) that VISA/MasterCard rules forbid the collusion of card scheme offerings with non-card-schemes offering where payment networks can by by-passed for local networks.
You can research as to what the success of the Polish experiment has been. Here is the original news article: Polish banks prep mobile payments system to take on card schemes