Payments and Fintech

Card payments run on interchange: the merchant's acquirer pays a fee to the card issuer at a rate the network sets, so Visa and Mastercard collect small charges on enormous volume while the issuing bank keeps the interchange and the credit spread. That fee structure produced thirty years of merchant litigation in the United States, and in markets without card infrastructure it left room for M-PESA to build payments on airtime balances and for Alipay and WeChat Pay to build them on commerce and messaging. Fintech margins depend on funding costs and fraud losses, both of which move with the credit cycle. The literature covers the network economics, PayPal's founding, the Visa and MasterCard antitrust case, mobile money in Kenya and China, and the Wirecard fraud from reporting and audit angles.

8 books