You can't cut out the cc companies. Both Stripe and Square are riding on their rails. The best they can do is try to negotiate the rates down and either keep a higher percentage for themselves or pass on the savings to their customers.
Strong Customer Authentication (SCA) requirements coming into force in Sept 2019 are making card payments increasingly unattractive.
Payment Initiation (via PISPs, which Stripe undoubtedly will become) will offer free, instant, seamless push-based payments where fraud is essentially impossible (and the merchant isn't liable anyway).
Imagine having Cuvva's payment button pop you out to the Monzo app, hit accept, then immediately pop back and have paid. No card networks or fees involved. Just a simple Faster Payment directly from the customer's bank account to ours.
For in-person payments, I'd imagine a similar arrangement could be facilitated via Apple Pay.
May take non-EU countries a while to follow, but they surely will eventually. The days of CC companies are numbered.
Something similar (but not quite identical) exists for direct debits called the direct debit guarantee.
But, for me, I will be staying with the cards until the chargeback/dispute schemes match up on bank transfers. I don't want to have to go to the small claims court if I have a problem.
Some sibling comments echo that this is underway in Europe. In America, the credit part of "credit card" is relevant. Many purchases on CC's here are intended as short-term (or longer) loans. (Something like 40% of American credit card holders carry a balance.) Direct debit from a bank account does not (and cannot) fulfill this use case.
Sure it’s sad that we no longer get air miles etc. But the reality is that we never should have in the first place - was a symptom of a nonsensical system.
I wish. PSD2 will do nothing for consumers and won't hurt CC companies in the slightest. The requirements to actually be able to use the PSD2 APIs are insane. The only companies who will be able to use them are big players like banks, CC companies, large payment processors and large IT companies like Google/MS/IBM/Apple.
Great job team! Looking forward to more of this in the future \o/
see e.g. https://stripe.com/us/payments and https://stripe.com/connect (under "Rigorous Compliance" and "Compliance respectively").
You'll also find them on CA's directory of money transmitters. http://www.dbo.ca.gov/Licensees/money_transmitters/money_tra...
That currently happens when an issuer card is used in a merchant that is acquired/processed with the same issuing bank. It is called an "on us" transaction and doesn't need to fire through the card scheme rails.
This is why, unfortunately, credit card companies can charge the fees that they do. For example, the issuing banks take on liability if payers don't pay, for example. I don't think Stripe is willing to get in the business of this unless they want to turn into a bank.
However, I seem to recall WalMart investigating this option a while back, and it never happened. It may be that the more you look at the option of becoming a bank, the more it looks like it would take over your life/business. Also, there are doubtless many lobbyists who the existing banks employ who would try to stop it.
Related side note: I've always wondered, if people don't ever need the "credit" in the credit card transaction, could they get a discount of 2 odd % on each transaction that the CC companies charge, say if they connect their bank accounts directly to they payment methods? This would effectively a debit card but not using the VISA/MC networks. What's stopping Apple/Google pay from processing payments directly from my bank?
But if you had to rely on debit cards only, then commerce at least in the US would grind to a halt. I believe the average American CC debt is ~$8000.
but the regulatory environment tightened up and being both a bank and a retailer became less appealing, and consumers found store branded credit cards less appealing, so they sold the bank portion.