Specialist
Senior executive at Intrepid Ventures
Agenda
- Operating environment for traditional card networks and potential performance across regions post pandemic
- Traditional card networks vs buy now, pay later programmes, digital wallets and alternative payment systems
- Relative positioning of Visa (NYSE: V), Mastercard (NYSE: MA), American Express (NYSE: AXP), Discover (NYSE: DFS), UnionPay and others, including which are most at risk or insulated from threats
- Regulatory outlook, including potential changes resulting from the European Payments Initiative and new US regulatory regime
- Outlook for the rest of 2021 and beyond – potential impact of cryptocurrencies and central bank digital currencies
Questions
1.
What are your thoughts on the operating environment for card networks? How do you think about potential performance across different verticals or regions as we emerge in a post-pandemic world?
2.
What do you think about the mid-to-long-term threats to traditional card networks? What do you think are the most significant or likely threats that could develop over the next maybe 3-10 years?
3.
How serious do you think the European banks are about the European Payments Initiative? How significant are their revenues from card payments in terms of interchange fees and rebates? Are they not afraid of cannibalising those revenues by creating an alternative payment network? What is the likely impact on Visa and Mastercard?
4.
You mentioned that the US is the largest market and, you believe, the biggest regulatory threat. How and when would that manifest? What are the implications of the new administration, new congress and new regulatory heads?
5.
Do you think the closed networks with buy now, pay later and companies such as PayPal rolling out a digital wallet potentially pose a threat to the card networks over the near-to-mid-to-long term?
6.
Why haven’t the big tech companies such as Amazon and Facebook started their own networks to circumvent the traditional card networks? Will that be a threat at any point? What pressure would that potentially exert on merchant discounts? Do you think the spread will compress over time? How would that impact the cards vs the banks?
7.
Which of the traditional networks do you think is best-positioned to insulate from the threats or even innovate and capitalise on the market shifts? Do you think the networks are doing enough innovation or M&A to stay relevant?
8.
Do you think there are any threats from ACH [automated clearing house]-type players such as Trustly? Is there a disruptive risk from account-to-account-type payments for debit franchises, given that Visa was blocked from acquiring Plaid?
9.
You mentioned public and private digital fiat currencies could be a long-term threat to the networks. Cryptocurrencies are often touted as a cheaper, superior payment method which removes the intermediaries. But they seem to be inferior payment systems that are more expensive than card transactions and need just as many intermediaries to store the assets and clear and settle payments. There are also mining constraints, meaning that when transactions increase quickly, transaction costs can also increase. Why are cryptocurrencies discussed so much as an alternative to current payment methods, given these inefficiencies? What are we missing? If this does start to impact the traditional networks, when will that be and what will be the implications for Visa or Mastercard?
