Disrupting the Status Quo: The Challenge to Card Payment Fees
Sep 8, 2023
Super Thinking
For years, card payment fees have been an accepted norm in the retail industry. These fees, charged to businesses for accepting card payments, have long been a source of frustration and financial burden. But until recently, very few have dared to challenge this status quo within the $52 trillion card payment market.
At the heart of this problem, consumers want to save money, but merchants are less open to offering cashback or discounts due to the costs involved.. In addition, merchants want to acquire new customers but with rising costs of acquisition, this is becoming more challenging.
Below we will explore the reasons why no one has challenged card payment fees until now and the emergence of disruptive forces, such as Super Payments, that are shaking up the industry.
Lack of Alternatives
One reason why card payment fees went unchallenged for so long was the absence of any real, viable alternatives. Credit and debit card payments have been the dominant method of transaction for years, and businesses had little choice but to accept them. With limited alternatives available, card payment processors held significant leverage over retailers, allowing them to impose fees without significant resistance.
Complex and Opaque Fee Structures
Card payment fees have historically been complex and difficult to understand. Businesses often found it challenging to decipher the intricate fee structures imposed by payment processors, leaving them feeling powerless to challenge or negotiate these fees effectively. The lack of transparency made it difficult to assess the true cost of accepting card payments, further deterring challenges to the status quo.
Industry Dominance
A handful of major card payment processors have dominated the market for years, establishing a near-monopoly. These dominant players have the resources and infrastructure to process card payments efficiently, making it difficult for new entrants to disrupt the market. The industry's concentration and lack of competition made challenging card payment fees seem like an insurmountable task.
Fear of Losing Customers
Businesses were often reluctant to challenge card payment fees due to the fear of losing customers. In a society increasingly reliant on card payments, declining to accept cards could potentially alienate a significant portion of the customer base. Retailers were hesitant to rock the boat and risk losing sales by refusing to accept card payments or imposing additional fees on customers.
The Emergence of Disruptive Forces, and why Super Payments was created
Despite the historical barriers, recent years have seen the emergence of disruptive forces that are challenging the card payment fee status quo. These forces are reshaping the landscape and paving the way for change:
a) Technological Advancements: The rapid advancement of technology has opened up new avenues for payment processing. Mobile payment solutions, digital wallets, and peer-to-peer payment platforms have gained popularity, providing alternative options for both businesses and consumers. These innovations offer reduced fees, increased transparency, and greater control over payment processing.
b) Fintech Startups: Fintech startups, armed with innovative ideas and agile business models, have entered the payment processing arena. These startups challenge the dominance of traditional payment processors, offering competitive rates, simplified fee structures, and transparent pricing. Their disruptive approach has forced incumbents to reevaluate their practices and consider more customer-friendly fee structures.
However, Super Payments is the only company globally to offer free payments, with some of these savings passed onto the customer in the form of cash rewards. The idea is that both the merchants & the consumers win with reduced fees and increased loyalty and retention, along with discounts on all future purchases for consumers, with the option for gifting and earning referral rewards as well. Using open banking, with a simple payment experience, and a single integration that supports the full tech stack- Super is already revolutionising the traditional payment industry.
c) Regulatory Intervention: Governments and regulatory bodies have started to address the issue of card payment fees. In some regions, regulations have been implemented to cap or reduce these fees, promoting fair competition and providing relief to businesses burdened by high transaction costs. Regulatory intervention has given businesses the confidence to challenge excessive fees and advocate for fairer practices.
The challenge to card payment fees has been a long time coming, with various factors contributing to its delayed arrival. Lack of alternatives, complex fee structures, industry dominance, and fear of losing customers have all played a role in maintaining the status quo.
Now times are changing! Companies like Super are empowering businesses to challenge the excessive fees and seek fairer alternatives. The future is bright, the future is fair!
Tracey Stern, Brand Marketing
