UBS Payments Innovation Event Series: US Alternative Debit Routing Discussion

Research evidence excerpt

UBS Payments Innovation Event Series: US Alternative Debit Routing Discussion

registering here. The replay

will be available for 30 days. Ella Zimmermann

Associate Analyst

ella.zimmermann@ubs.com

Broader industry context: Awareness of US alternative debit routing is relevant for +1-212-713 5000

investors seeking to understand the evolving economics of domestic debit acceptance,

Holt Bashinskyparticularly as merchants, PayFacs, PSPs, acquirers, gateways, and processors

increasingly evaluate whether more debit volume should be be routed to lower-cost

holt.bashinsky@ubs.com

alternative debit networks. The discussion is directly relevant for companies across the +1-212-713 2833

broader payments landscape, including Visa, Mastercard, Fiserv / STAR and Accel, FIS /

Siddhanth SoniNYCE, Discover / PULSE, Global Payments, Adyen, Stripe, Block, PayPal / Braintree,

Shopify, Toast, Shift4, Fiserv / Clover, and other acquirers, processors, ISVs, PayFacs,

siddhanth.soni@ubs.com

gateways, and merchant platforms. The discussion suggests that while alternative debit +1-212-649 8010

routing has the potential to create incremental pressure on Visa & Mastercard debit

volumes and yields (potentially, and at the margin), adoption is constrained by PSP

enablement, the cost/complexity of infrastructure that supports alternative routing

paths, the cost of re-routing/retrying failed authorizations, dual-message requirements,

tokenization and vaulting complexity, authorization-rate risk, cardholder / issuer mix,

and network incentives. Importantly, the opportunity is likely to be slow moving and

iterative, as routing optimization relies on PSPs abstracting complexity away from

merchants and consumers.

Adyen Intelligent Payment Routing as an example: Adyen’s Intelligent Payment