Visa & Mastercard: Brief initial thoughts on US debit network headlines

Research evidence excerpt

Visa & Mastercard: Brief initial thoughts on US debit network headlines

ch could ella.zimmermann@ubs.com

reduce the interchange uplift the new owner of the network would receive); 2) +1-212-713 5000

Consumer awareness campaigns and/or potential related marketing to increase Holt Bashinsky

consumer confidence in the acceptance footprint; and 3) Resolving potential Associate Analyst

technical gaps of the PIN debit networks (e.g., STAR, NYCE) that could require holt.bashinsky@ubs.com

additional investment from certain networks in building and/or enhancing their +1-212-713 2833

dual-message capabilities. Siddhanth Soni

Associate Analyst

Some card network incentives could potentially be reduced, which would serve as siddhanth.soni@ubs.com

an offset (particularly when viewed across debit and credit). This would be +1-212-649 8010

balanced against certain competitive dynamics (i.e., opportunity to offer higher

incentives on credit from the non-incumbent network).

Important SMB banking and lending relationships, alongside reputational impacts,

would need to be considered (i.e., SMBs are the ones that would absorb higher

interchange fees).

Potential for Fiserv to continue to view the debit networks as strategically

important across both its Merchant and Financial Solutions businesses (i.e., cross-

sell, bundling, on us transactions).

Increasing payments acceptance costs could add fuel to various other regulatory

topics (most notably, the Credit Card Competition Act [CCCA], which has the

potential to impact the credit card businesses of the large banks, who all happen

to be meaningful credit card issuers as well).

Panelists at our recent UBS Napa event suggested that even if a large bank did

attempt to bring a debit network in-house (i.e., acquire), this would likely result in