Retailers ready to battle card companies over one-click payments
Visa and Mastercard are discussing partnering to create a universal one-click button to eliminate the final pain-point to online purchases: the complicated checkout process. But retailers have concerns.
The initiative, first discussed at a conference in Las Vegas earlier this year, would merge the Masterpass and Visa Checkout buttons to create a one-click buy option, similar to that offered by PayPal and Amazon. Both Masterpass and Visa Checkout have been challenged competing against Paypal, the leader in digital wallets, and Amazon Pay.
According to the payment providers, a shared single payment button would eliminate the requirement to type in a 16-digit account number for any e-commerce site where consumer’s card credentials aren’t already stored. A universal button would also reduce the clutter of numerous payment options shown at checkout. Finally, online transactions promise to be less vulnerable to fraud because a unique token would reduce the likelihood that card numbers will be stolen.
According to a Wall Street Journal article, however, representatives of Walmart, Home Depot Walgreens and other retailers recently met with federal regulators over concerns that combining the individual payment buttons might prevent them from routing their debit card transactions to smaller networks that charge lower interchange fees.
The move may also change how online transactions are treated under the Durbin amendment, which placed a cap on interchange fees and ensured merchants could choose from more than one debit card network to route transactions. The use of a special token is also being seen by retailers as a potential hurdle for small card networks.
Visa and Mastercard have discounted the concerns and assured retailers that smaller networks will still be an option. With online cart abandonment rates ranging from two-thirds to more than three-quarters, the major payment networks further argue that online payments have to move closer to the ease plastic cards deliver in stores.
“In the traditional environment, you walk into a store, take out a card and pay at the terminal; it’s ubiquitous,” said Jess Turner, EVP of digital payments and labs of North America at Mastercard, earlier this year in Vegas, according to Payments Source. “The digital world is not all of the way there yet.”
- Visa, Mastercard Push for One-Click Ordering. Retailers Say ‘Not So Fast’ – The Wall Street Journal
- Visa, Mastercard Talk About Cooperating in Online Shopping – The Wall Street Journal
- Shiny New Button May Help Visa, Mastercard and AmEx Fight PayPal – Bloomberg
- Some Large Retailers Not Sold On One-Click Ordering – PYMNTS.com
- Visa and Mastercard Will Combine E-Commerce Payment Buttons – Bank Innovation
- Will the Mastercard/Visa ‘button’ make history, or be lost to the ages? – Payment Source
- Visa, Mastercard may team up on shared payment button for online shopping – MarketWatch
DISCUSSION QUESTIONS: Should retailers have concerns over the single payment button being spearheaded by Visa and Mastercard? Do you see more pros than cons in a universal one-click button for e-commerce?