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Treasury

Cheaper options opening up competition in payments

The search for alternative payments methods is picking up steam as lower-cost options become more accessible.



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The payments space is undergoing rapid change due to the implementation of the second Payment Services Directive and the evolution of mobile. There is a consequent push away from credit-card payments as lower cost options become available.

Tony McLaughlin, managing director, emerging payments and business development, treasury and trade solutions at Citi, says: “Merchants are looking for new methods of online payment that reduce costs, fraud and chargebacks while delivering a frictionless payment experience.”

In the UK, HM Revenue & Customs has stopped accepting credit cards as a payment option. In the US, meanwhile, Amazon has started to offer cashback on payments that have been made in any method other than by credit card.

McLaughlin says: “Many industries pay billions of dollars a year in the cost of collections through card products, so there is extreme interest in the development of alternatives that may drive costs from percents to cents.”

For some industries, the removal of fees will provide a substantial boost to profits. The International Air Transport Association states that collections cost the airline industry as a whole around $7 billion a year in fees, with the majority from credit cards.



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