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MASTERCARD TOUTS CO-BRANDED CARD WINS: MasterCard, the second largest payments network in the U.S., is outmaneuvering rivals among large U.S.-based retailers. On MasterCard's earnings call yesterday, CEO Ajay Banga described the card network's new co-branded card partnerships with retail giants Target (formerly partnered with rival visa on co-branded cards) and Wal-Mart (which dumped Discover to sign on with MasterCard), as well as a partnership with Amazon in Japan on a co-branded card. MasterCard also said it is expanding the Wal-Mart co-branded card beyond the U.S. to Latin American markets, including Mexico and Chile. The company announced financial results that beat analyst estimates as well, thanks to healthy debit card payment card volume globally.
MasterCard's ability to poach large merchants away from rivals is in part explained by the new competitive atmosphere created by Target's data breach and the switch over to the new EMV security standard, which puts microchips on payment cards to make them more secure. EMV card transactions can be completed with either a PIN number or a signature (and Visa and MasterCard allow merchants to adopt either method) but MasterCard has sent clear signals that PIN technology is more secure and provided incentives for merchants to adopt the PIN method. That seems to have won over merchants concerned with reassuring consumers. “Target is very publicly broadcasting that they are an early adopter of EMV and it’s not just EMV, it’s also chip-and-PIN,” Darrin Peller, a Barclays analyst, was quoted as saying in BusinessWeek. “That gives room to someone like MasterCard to gain market share.”
ALIBABA-ALIPAY REPURCHASE RUMORS: Alibaba is considering repurchasing a stake in payment processor Alipay, according to the Wall Street Journal. Alibaba founder Jack Ma spun Alipay off in 2011. Alipay is actually owned by another company in which Ma holds a large stake, through it continues to be an integral part of Alibaba’s ecosystem through its payment processing services.
'VOYEURISM' HELPS VENMO ADD USERS: eBay-owned peer-to-peer payments app has seen “explosive growth on college campuses,” eBay CEO John Donahoe’s said on eBay's earnings call earlier this week. The Wire echoes Donahoe's boast calling Venmo “the best social network nobody’s talking about.” What hook? Venmo includes a social network-style news feed that shows transactions to and from a user’s Facebook friends. No dollar amounts are listed, but Venmo users can tag transactions with a playful tag when they make a payment. "We’re all interested in seeing what our friends are paying for,” journalist Emma Roller was quoted as saying in The Wire. "It’s this weird voyeurism." But seeing friends' activity helps create buzz around Venmo and reinforces the network effect — as more people join, it begins to seem that much more indispensable.
Alongside PopMoney, Square Cash, and Google Wallet, Venmo is an emerging frontrunner in the U.S. mobile peer-to-peer payments space, which will grow to at least $50 billion by 2018.
CHIP-CARD BOOSTERS HOPE NEW EMV STANDARD WILL SPUR ADOPTION: The EMV Migration Forum, an industry group tasked with facilitating the switch to the new EMV security standard, released technical guidelines this week for implementing EMV for debit card transactions. The new specs come fast on the heels of Target’s announcement that it would accelerate transition to EMV for its branded store cards and point-of-sale equipment. Citing cost concerns, the retail industry and card issuers have both been sluggish on the EMV transition ahead of an October 2015 deadline. Chip-card boosters hope the issuing of standard will spur quicker adoption. EMV adoption has been particularly difficult for debit cards because of U.S. financial regulations that require debit transactions to be routed on multiple unaffiliated networks to spur competition in processing.
MASTERCARD LOBBIES ON BITCOIN: MasterCard has listed Bitcoin as one of its priorities as it lobbies U.S. Congress on laws and regulations, The Hill reports. Documents filed in late April by lobbying firm Peck Madigan Jones list “Bitcoin and mobile payments” among the card giant’s policy interests. It's the first official sign of Bitcoin-focused lobbying in the U.S.
Correction: In past newsletters we have incorrectly stated that Alipay is currently owned by Alibaba. As a newsletter item above states, Alipay is owned by a separate company in which Alibaba founder Jack Ma holds a large stake. Apologies!
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