Psst! Secret...
A little bird told me that Bank Negara is adamant about pushing down the merchant interchange fee by as much as 60% i.e. from 1.2% down to 0.5%!
The banks are obviously not happy about it because it is going to be an immediate hit on revenues.
However, for those banks who are big on merchant acquisition, the impact may not be as bad IF this drop in rates brings about a large growth in volume due to wider acceptance. So the volume growth off-sets the drop in earnings per transaction.
To me, this is a good thing because one of the resistant points towards more cash-less transactions is the merchant rate. Retailer don't want to accept cards for small transactions because they contend (which I think is bullshit) that they don't make money off these. Please, bitch, you shouldn't be in business if that is the case.
Unfortunately, this move is one-sided in that it is only about the MDR but the majority of people out there don't even have a credit card (like 70% of the working adult population Do Not qualify for a card). So it will only impact the middle classes to move towards cash-less - if they are going to do so even?
The upshot of this is that I predict players like MBf Cards will be the winner because they are big in merchant acquisition and they don't mind acquiring small volume merchants at all. And they are fast movers, so I expect that they will grab the market share in the small restaurants, hawkers, market traders and so on.
With POS technology being so cheap, available and reliable these days (you can even buy a small device to plug into your smart phone and voila, you have a card terminal!), who is to stop them from acquiring just about any business out there?
Of course there is going to be fraud risk again and more disputed transactions but that is inevitable. Ultimately, it is better for the economy here to have less physical cash floating around and more digital transactions as it means more funds circulating in the 'white' economy and less in the 'black market'.
The banks are obviously not happy about it because it is going to be an immediate hit on revenues.
However, for those banks who are big on merchant acquisition, the impact may not be as bad IF this drop in rates brings about a large growth in volume due to wider acceptance. So the volume growth off-sets the drop in earnings per transaction.
To me, this is a good thing because one of the resistant points towards more cash-less transactions is the merchant rate. Retailer don't want to accept cards for small transactions because they contend (which I think is bullshit) that they don't make money off these. Please, bitch, you shouldn't be in business if that is the case.
Unfortunately, this move is one-sided in that it is only about the MDR but the majority of people out there don't even have a credit card (like 70% of the working adult population Do Not qualify for a card). So it will only impact the middle classes to move towards cash-less - if they are going to do so even?
The upshot of this is that I predict players like MBf Cards will be the winner because they are big in merchant acquisition and they don't mind acquiring small volume merchants at all. And they are fast movers, so I expect that they will grab the market share in the small restaurants, hawkers, market traders and so on.
With POS technology being so cheap, available and reliable these days (you can even buy a small device to plug into your smart phone and voila, you have a card terminal!), who is to stop them from acquiring just about any business out there?
Of course there is going to be fraud risk again and more disputed transactions but that is inevitable. Ultimately, it is better for the economy here to have less physical cash floating around and more digital transactions as it means more funds circulating in the 'white' economy and less in the 'black market'.
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