I feel like the Coin card that's coming out in 2014 could be disruptive and part of the "future of credit cards". As someone with 7-8 cards that bulk up my wallet, the chance to have all of those housed in one smart credit card is exciting.

I don't know how I feel about using my phone as a primary payment method, and others must feel the same, since NFC payments have failed to take off (at least so far).

I've always been wary of centralized data. That is, all my information loaded in 1 place. If that's compromised, you'll be hurting...

Yup, that's why I would never do that Coin card.

If the EU Commmission gets its way, there will not be much room for disruption. They want to limit merchants' fees to a tiny amount, which will not only wipe out all credit card benefits, but will probably extend the time merchants will have to wait for their money - but, foremost, it will make it impossible for any "disruptor" to enter the market. There won't be enough to earned in relation to the risk they would have to take.

The EU as a single market (which it isn't quite yet) isn't the only market. It's still viable to disrupt the US, African or Asian markets.

IMHO, the EU take is more correct than the oligopoly empowering approach on display in the US.

First, in many EU lands the cost of taking credit cards is already zero or close to it (e.g., France). In large part this is because the governments believe that card payments cut down on tax evasion and also because they want to push technology out into all parts of the economy. The MiniTel was another effort in this direction which was overtaken by newer technology. But, it looks as though the card effort is working.

Use of cards should be a close to zero cost, if not zero to the merchant as a way to enhance overall efficiency. Electronic transfers should be lots cheaper than handling cash because they cost much less to do.

In the US we have a silly system where the banks get to profit from an inefficient card system that allows them to skim off big profits for doing very little.

It is nice that the skim funds all those miles bonuses on cards (nice for FTers anyhow) but, overall, it is a drag on the economy.

Banks and upstart companies have been playing with technology for lending since the beginning of time - both in terms of finding better risk splitters (the only way to bring down borrowing costs for consumers sustainably) - and in finding ways to make being a customer more attractive.

Drive thru teller windows, the credit card itself, ATM machines. Loans made outside of a bank. All disruptive. Of course the system will change in some way. It always has.

We're living through a secular shift away from checks and cash fueled by payment terminals.

Though the biggest change was the unwinding of interstate banking regulations which led to the megabanks we have today.

And some people will try to lend too freely to risky groups and get burned as well. A tale as old as time.

Tell us something new. This obsession with 'disruption' is getting old because it's really nothing new.

Do you have any sources to back this claim up? The EU Commission is introducing the legislation exactly because they deem the costs way to high and want to slash it by more than 90%.

This is great news to Visa and MC - it assures them that noone will be able to attack their market share with lower fees or special perks.

For the most part, the current cards payments system are already very convenient and fast for in person

The frictions you mentioned are mostly not a technology issue.
e.g. US banks taking its time to move towards EMV.

In addition to Credit Cards, there is Debit Cards that functions both over the ATM network for cash and Visa / MC / Discover / AMEX network that allows you to shop in person and online. And now even Prepaid cards that are designed to replace your regular bank account.

After the Durbin act, debit card interchange rate now are in the 0.05% range.

I do agree that online shopping could have been easier. The process can't be shorten too much though as anything that needs to be shipped, even if you don't have to key in that 16 digit card number, you still have to key in a shipping address.

Or, more likely, their profits will drop dramatically.

In any event, for a recent summary of merchant costs in various countries see this story from the Christian Science Monitor. http://www.csmonitor.com/Business/ne...urts-consumers

You will note there is a wide range in Europe with some (e.g., France) pretty low and some (e.g., Spain) pretty high. US rates are among the highest.

By the way, there was a long thread on FT a couple of years ago which got into merchant costs in France for taking cards and several French merchants, including an MD (in a small town), chimed in (gotta be amazed at FT's reach ) and the Doc advised that his merchant cost was zero or so close to zero it didn't matter as a matter of government policy.

This is the same thing I hear from friends in France who run small businesses. It is part of the same government push to provide high speed internet access in the smallest villages. High tech for all! So the country folks don't get left behind.

[QUOTE=biggestbopper;21939627]In any event, for a recent summary of merchant costs in various countries see this story from the Christian Science Monitor. http://www.csmonitor.com/Business/ne...urts-consumers

Thank you for that link. While interesting, but it is for a very specific case:

"Here's a look at what a $50 supermarket transaction costs with a Visa card cost in various countries, based on calculations of interchange fees based on October 2010 data available on Visa�s site."

France, according to that chart, has 0.5% - about double of what the EU commission wants to impose as the max. And this is according to Visa - we don't know if there are intermediaries who add charges of their own, and we don't know what protection against fraud is provided at that rate, and how fast the merchant receives the money.

Furthermore, you have to keep in mind that this is for supermarkets, which have very low profit margins in Europe (except for non-food items). So, for the longest time, supermarkets simply did not accept credit cards - only when the rates came down a lot, they started do accept them.

As the rates charged by payment networks vary by the type of business, you can not deduct from 0.5% for supermarkets that this is the rate any French business with any level of fraud and any payout-speed would pay.

Another thing to keep in mind are different fraud rates. They are much lower in Europe than in North America. This can influence the disagio rates as well.

I drove by a Tesla a couple months ago, it was on fire. Yes I am serious. 167 outside Seattle

I know what you mean but don't see it happening anytime soon.

No rewards and I would just pay cash.

I suspect the concept of the credit card / debit card will remain, but the means to use it will, I expect, go biometric.

This means you have no physical card to worry about, you just press your thumb and perhaps type in a PIN at a POS terminal (which will have to give you the option of which virtual 'credit card' to use e.g. your AMEX, your VISA etc.

We are talking about the future so this just means POS terminals will need to be updated and all countries will need to be connected to faster networks.

You still get the 'benefits' of each card - you just no longer have a physical card anymore.

And this would work in an "offline" situation how?

(It's seriously limiting to not be able to use credit cards just because the connection is down. There's often a backup method, but it needs either raised digits on the card so they can dig the old card machine out of the closet, or someone writing down all the info from the card as if they were taking a card order over the phone. I don't see how a finger subsitutes for either of those.)

I can think of plenty of situations where cards are currently processed "offline". Starting with, of relevance to many FTers, the online portable card machines for buying food/drinks/etc in coach on several legacy airlines. And then there's all those unattended rural gas statiion in France (where only "offline" chip and PIN cards work).

I thought we were talking about the future?

For this to work, in the future, there will need to be high bandwidth 'over the air' network connections globally for all this to work. There will be no option to be 'offline'.

We're not there yet.