What are the Odds?

  Reading the pages of this month's issue, one could get a sense that tensions are mounting between merchants, card issuers and the payment networks. Merchants continue to complain about rising expenses associated with credit card acceptance, and now they also contend policies regarding the storage of customers' card and payment data unfairly put the onus on them to secure such information.
  Are the payment networks, particularly Visa USA and MasterCard Worldwide, working to address these issues to satisfy the merchants' concerns? Or will merchants, frustrated by what they view as a cold shoulder from the networks, pursue some of the emerging, lower-cost payment alternatives?
  The payment networks likely will let merchants seek out the alternatives. After all, what are the chances the emerging schemes will succeed?
  As this month's cover story by Cards&Payments Associate Editor Kate Fitzgerald points out, those chances rise the longer merchants remain unhappy. Still, any big industry shakeup likely would not occur quickly.
  Tempo Payments Inc., a PIN-debit network that settles transactions over the automated clearinghouse network, has yet to gain traction. That seems a bit surprising given that no banks are involved in Tempo's system, retailers earn revenue when the Tempo cards they issue are used at other retailers' stores in the Tempo network and merchants pay only 15 cents per transaction. And Tempo, formerly Debitman, has been around for about five years.
  Such longevity in itself, though, is a positive for any "new" company because it suggests viability. And that might prompt merchants to pay closer attention to Tempo.
  Some observers are touting the potential of RevolutionCard, which would process a variety of proprietary payments, including credit card transactions, on an Internet-based system that would charge merchants 0.5% of the sale amount, about 150 basis points less than a traditional credit card transaction. RevolutionCard, formerly GratisCard, first must build an acceptance network and strike deals with retailers and card marketers to issue cards. That will take time, and there is no guarantee it will succeed.
  One of the reasons observers are looking at RevolutionCard is it is backed by the deep pockets of Steve Case, co-founder of America Online. But as has occurred with many start-ups, all it takes to doom a company is for the chief investors to back out.
  For RevolutionCard, Case's patience surely will be tested.
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