MasterCard stings PayPal with payment fee hike

Secrecy comes at a price


PayPal, Google Wallet and other online payment systems face higher transaction fees from MasterCard in retaliation for their refusal to share data on what people are spending. Visa is likely to follow suit.

The amount that PayPal has to pay MasterCard for every transaction will go up as the latter introduces new charges for intermediated payment processors. This change is on the grounds that such processors don't share transaction details, which the card giants would love to get hold of as it can be used to research buying patterns and the like.

Companies such as PayPal allow payments between users, so the party (perhaps a merchant) receiving the money doesn't need to be registered with the credit-card company. PayPal collects the dosh from the payer's card, and deducts a processing fee before passing the cash on to the receiving party. MasterCard would prefer the receiver to be registered directly so will apply the new fee from June to any payment that is staged in this way.

The fee will only apply within the US, initially at least, and Visa hasn't said it will follow suit. But Reuters tells us that Visa's CEO described the new fee as "totally appropriate", and it is already impacting PayPal's owner eBay according to financial blogger Tom Noyes.

PayPal exploded in use because registering to receive credit-card payments was a tortuous process best left to large retailers. But companies such as Square and Sailpay have simplified that process enormously and MasterCard clearly feels the PayPal's raison d'etre has been largely eliminated - so the time has come for the killer punch.

Individuals selling stuff on eBay might still need PayPal or similar, the argument goes, but everyone else should sign up with one of the numerous online payment schemes popping up around the world and share the purchasing data with the credit-card companies like they're supposed to.

It's also bad news for Google Wallet, the NFC pay-by-bonk platform which has been forced to become a staged wallet because the card providers won't create instances of their cards to fit in Google's on-handset secure storage. Google Wallet is quite capable of failing, though, without that additional cost (though it could provide a useful scapegoat when failure arrives).

There are advantages to going direct - customers get the free insurance and fraud protection which come with using most credit cards (and don't apply to transactions processed through a third-party wallet), but most will see this as an embedded duopoly using its market power to undermine competitors. ®

Similar topics


Other stories you might like

  • How to keep a support contract: Make the user think they solved the problem

    Look what you found! Aren't you clever!

    On Call Let us take a little trip back to the days before the PC, when terminals ruled supreme, to find that the more things change the more they stay the same. Welcome to On Call.

    Today's story comes from "Keith" (not his name) and concerns the rage of a user whose expensive terminal would crash once a day, pretty much at the same time.

    The terminal in question was a TAB 132/15. It was an impressive bit of kit for the time and was capable of displaying 132 characters of crisp, green text on a 15-inch CRT housed in a futuristic plastic case. Luxury for sure, unless one was the financial trader trying to use the device.

    Continue reading
  • Apple kicked an M1-shaped hole in Intel's quarter

    Chipzilla braces for a China-gaming-ban-shaped hole in future results, predicts more product delays

    Intel has blamed Apple's switch to its own M1 silicon in Macs for a dip in sales at its client computing group, and foreshadowed future unpleasantness caused by supply chain issues and China's recent internet crackdowns.

    Chipzilla's finances were robust for the third quarter of its financial year: revenue of $19.2 billion was up five per cent year over year, while net income of $6.8 billion was up 60 per cent compared to 2020's Q3.

    But revenue for the client computing group was down two points. CFO George Davis – whose retirement was announced today – was at pains to point out that were it not for Apple quitting Intel silicon and Chipzilla exiting the modem business, client-related revenue would have risen ten per cent.

    Continue reading
  • How your phone, laptop, or watch can be tracked by their Bluetooth transmissions

    Unique fingerprints lurk in radio signals more often than not, it seems

    Over the past few years, mobile devices have become increasingly chatty over the Bluetooth Low Energy (BLE) protocol and this turns out to be a somewhat significant privacy risk.

    Seven boffins at University of California San Diego – Hadi Givehchian, Nishant Bhaskar, Eliana Rodriguez Herrera, Héctor Rodrigo López Soto, Christian Dameff, Dinesh Bharadia, and Aaron Schulman – tested the BLE implementations on several popular phones, PCs, and gadgets, and found they can be tracked through their physical signaling characteristics albeit with intermittent success.

    That means the devices may emit a unique fingerprint, meaning it's possible to look out for those fingerprints in multiple locations to figure out where those devices have been and when. This could be used to track people; you'll have to use your imagination to determine who would or could usefully exploit this. That said, at least two members of the team believe it's worth product makers addressing this privacy weakness.

    Continue reading

Biting the hand that feeds IT © 1998–2021