If there's already very little margin left in interchange for fintechs, what's to stop further compression in pursuit of customer acquisition for higher margin products? End state... is interchange going to zero?
Maybe on the acquiring side, but on the issuing side in the US, definitely not. Most interchange flows to the issuing bank. Issuing banks fund lucrative reward programs with those fees. American consumers love credit card points.
I think we're more likely to see a new payment method disrupt credit cards than to have interchange fees go to zero.
I think we're more likely to see a new payment method disrupt credit cards than to have interchange fees go to zero.