Feeds

MasterCard stings PayPal with payment fee hike

Secrecy comes at a price

Build a business case: developing custom apps

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. ®

Build a business case: developing custom apps

More from The Register

next story
iPad? More like iFAD: We reveal why Apple fell into IBM's arms
But never fear fanbois, you're still lapping up iPhones, Macs
Sonos AXES support for Apple's iOS4 and 5
Want to use your iThing? You can't - it's too old
Amazon says Hachette should lower ebook prices, pay authors more
Oh yeah ... and a 30% cut for Amazon to seal the deal
Philip K Dick 'Nazi alternate reality' story to be made into TV series
Amazon Studios, Ridley Scott firm to produce The Man in the High Castle
Joe Average isn't worth $10 a year to Mark Zuckerberg
The Social Network deflates the PC resurgence with mobile-only usage prediction
Chips are down at Broadcom: Thousands of workers laid off
Cellphone baseband device biz shuttered
Feel free to BONK on the TUBE, says Transport for London
Plus: Almost NOBODY uses pay-by-bonk on buses - Visa
Nintend-OH NO! Sorry, Mario – your profits are in another castle
Red-hatted mascot, red-colored logo, red-stained finance books
Twitch rich as Google flicks $1bn hitch switch, claims snitch
Gameplay streaming biz and search king refuse to deny fresh gobble rumors
Stick a 4K in them: Super high-res TVs are DONE
4,000 pixels is niche now... Don't say we didn't warn you
prev story

Whitepapers

Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.
Why and how to choose the right cloud vendor
The benefits of cloud-based storage in your processes. Eliminate onsite, disk-based backup and archiving in favor of cloud-based data protection.
The Essential Guide to IT Transformation
ServiceNow discusses three IT transformations that can help CIO's automate IT services to transform IT and the enterprise.
Maximize storage efficiency across the enterprise
The HP StoreOnce backup solution offers highly flexible, centrally managed, and highly efficient data protection for any enterprise.