Visa CEO Ready to Slap PayPal with Digital Wallet Fee
March 21, 2013 1:08 PM
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PayPal will undoubtedly pass new fees on to its customers
One thing every user of PayPal is certainly familiar with its fees. It now looks as though the company famous for its user fees will have the tables turned. Visa CEO Charlie Scharf recently suggested that the credit card company could impose a fee on digital wallet operators such as PayPal.
MasterCard has already announced it plans to charge a fee to digital wallet operators starting in June. Fears that other major credit card operators could start charging PayPal fees for transactions have hurt PayPal shares. PayPal currently pays standard credit card fees to Visa and MasterCard, as well as American Express. These fees are paid whenever a PayPal purchase is made with a credit card bearing one of the companies’ logos.
The new fees that are being considered are in addition to these standard credit card fees.
During the Barclays Emerging Payments Forum this week, Scharf said, "I think it is totally appropriate to do that."
PayPal has been making a big push into the retail market allowing users to pay for items in stores using their PayPal account. Some analysts believe that as a payment option in physical stores PayPal could be a threat to major credit card networks such as MasterCard, Visa, and American Express.
that it was reducing its fees in an effort to better compete with Amazon.com. While PayPal has yet to announce a fee increase, if PayPal begins getting charged more for transactions it would undoubtedly raise fees for customers.
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Biting the hand that feeds you.
3/22/2013 7:37:24 AM
Think about it. Credit card companies get huge amounts of profits from wallet companies like Paypal and Google. Turning around and hitting these huge income sources with this "wallet fee", will only cause them to pass it on to consumers. And what do these folks think will happen if consumers start seeing that buying things without a wallet service is far cheaper than using one?
People stop using these digital wallet services and go back to less secure, but cheaper methods of online purchases. or worse yet, they think twice about making that purchase in the first place.
So who wins with this brainwave? I see only 2 losers here:
1. Digital wallet services as people stop using them.
2. Credit card companies as the income from these digital wallets dries up.
3. Credit card companies get a double-whammy as some of those people who would have made that impulse purchase via the digital wallet now gives second thoughts about the purchase and decides against it for cost and security reasons.
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