Mastercard and Visa are making moves to defend their payments duopoly

With Big Tech and governments rolling out non-card payments solutions, Visa and Mastercard are making investments to defend their payments turf.

October 9, 2020

Mastercard and Visa are the world’s pre-eminent payment processors.

The two firms account for 90% of card payments outside of China and have a combined market value of ~$800B.

As the industry expands beyond cards, however, the duopoly is being forced to defend its payment turf like Ron Burgundy and the KVWN channel 4 team in Anchorman.

Google and Apple both have mobile payment offerings 

Meanwhile Amazon is trying to enter the race with a palm reader.

And, according to The Economist, 55 countries have “real-time” automated clearing-houses (ACH) solutions, even bigger than Big Tech’s.

These national bank-to-bank ACH systems were traditionally used to disburse recurring payments (e.g., payrolls, benefits) but now also serve as data pipes, which can be used to monitor fraud.

The duopoly isn’t sitting idle

Mastercard recently partnered with ACI Worldwide, a banking solutions firm that has created software for real-time payments.

Visa has “set up its own alternative to fast ACH, called Visa Direct, and offers services, such as security tools, to help strengthen countries’ payment networks,” according to The Economist.

Further, both firms acquired bank-to-bank processors last year to help facilitate international payments (and potentially compete against the SWIFT global bank messaging system).

The traditional card network is still growing at double digits but these moves show that Visa and Mastercard aren’t effing around.

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