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MCX Embracing QR Codes, The Cloud And Unparalleled Vagueness

January 17th, 2013

Lowe’s Manna offered as an example a $3 purchase and a $300 purchase. “Why does the $300 purchase cost so much more?” he asked. When payment brands argue that it’s because the risk is so much higher, Manna says he responds, “then let’s reduce the risk” instead of overcharging everyone.

Some retailers have embraced various mobile trials and said they’ll accept them all, just as they accept checks, cash, a half-dozen payment cards, giftcards, gift certificates, Traveler’s Checks and various other forms of payment today.

Walmart’s Henry said that take-all-comers strategy is a bad one. He painted a picture of what Walmart stores on Black Friday would look like with such an approach. “One customer’s face pops up on the screen. The next one keys in their phone number. The next one tries to tap their phone,” he said, suggesting it would cause associate and customer confusion, on top of sharply slowing down checkouts.

The biggest point of the group from its inception has been an attempt to not only sharply lower interchange fees but have them be charged in a manner that is much more fair to retailers. But when an audience member asked the group if MCX was open to becoming a processor, Roberts said the group would not do that.

This raises a key question. If the idea of processing payments directly is being taken off the table, what true negotiating power does MCX have with Visa and the other card brands?

Clearly, the new group—if these major chains stick together—would have huge volume purchasing power. But Walmart today already has pretty massive volume clout and it hasn’t been able to extract the types of payment interchange concessions it wants.

As long as Visa knows these chains would never want to halt accepting Visa, MasterCard, American Express and other brands, they have to play by the brands’ rules. Only if the brands honestly believe the business—and, with it, the brands’ executives’ livelihoods—might go away will they negotiate in good faith. Why that option is being taken off the table so publicly and so early is baffling.


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Why Did Gonzales Hackers Like European Cards So Much Better?

I am still unclear about the core point here-- why higher value of European cards. Supply and demand, yes, makes sense. But the fact that the cards were chip and pin (EMV) should make them less valuable because that demonstrably reduces the ability to use them fraudulently. Did the author mean that the chip and pin cards could be used in a country where EMV is not implemented--the US--and this mis-match make it easier to us them since the issuing banks may not have as robust anti-fraud controls as non-EMV banks because they assumed EMV would do the fraud prevention for them Read more...
Two possible reasons that I can think of and have seen in the past - 1) Cards issued by European banks when used online cross border don't usually support AVS checks. So, when a European card is used with a billing address that's in the US, an ecom merchant wouldn't necessarily know that the shipping zip code doesn't match the billing code. 2) Also, in offline chip countries the card determines whether or not a transaction is approved, not the issuer. In my experience, European issuers haven't developed the same checks on authorization requests as US issuers. So, these cards might be more valuable because they are more likely to get approved. Read more...
A smart card slot in terminals doesn't mean there is a reader or that the reader is activated. Then, activated reader or not, the U.S. processors don't have apps certified or ready to load into those terminals to accept and process smart card transactions just yet. Don't get your card(t) before the terminal (horse). Read more...
The marketplace does speak. More fraud capacity translates to higher value for the stolen data. Because nearly 100% of all US transactions are authorized online in real time, we have less fraud regardless of whether the card is Magstripe only or chip and PIn. Hence, $10 prices for US cards vs $25 for the European counterparts. Read more...
@David True. The European cards have both an EMV chip AND a mag stripe. Europeans may generally use the chip for their transactions, but the insecure stripe remains vulnerable to skimming, whether it be from a false front on an ATM or a dishonest waiter with a handheld skimmer. If their stripe is skimmed, the track data can still be cloned and used fraudulently in the United States. If European banks only detect fraud from 9-5 GMT, that might explain why American criminals prefer them over American bank issued cards, who have fraud detection in place 24x7. Read more...

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