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MasterCard Forcing PayPal To Pay Higher Fees

Posted by Soulskill on from the and-they'll-pass-the-spendings-on-to-you dept.

iComp sends this quote from El Reg: "PayPal, Google Wallet and other online payment systems face higher transaction fees from MasterCard in retaliation for their refusal to share data on what people are spending. Visa is likely to follow suit. The amount that PayPal has to pay MasterCard for every transaction will go up as the latter introduces new charges for intermediated payment processors. This change is on the grounds that such processors don't share transaction details, which the card giants would love to get hold of as it can be used to research buying patterns and the like. Companies such as PayPal allow payments between users, so the party (perhaps a merchant) receiving the money doesn't need to be registered with the credit-card company. PayPal collects the dosh from the payer's card, and deducts a processing fee before passing the cash on to the receiving party. MasterCard would prefer the receiver to be registered directly so will apply the new fee from June to any payment that is staged in this way."

10 of 260 comments (clear)

  1. Card to Card payments by Microlith · · Score: 5, Insightful

    Perhaps if Mastercard and Visa hadn't allowed PaypaI to usurp what they could very well have done themselves, long ago, they wouldn't be in this situation. I've always wanted the ability to painlessly send someone money, directly, and it's idiotic that paypaI (and other 3rd party wallet services) are the only way to do it. Completely redundant.

    1. Re:Card to Card payments by DanielRavenNest · · Score: 5, Funny

      > I've always wanted the ability to painlessly send someone money, directly,

      Behold: http://bitcoin.org/en/

      It's not everywhere yet, but it will be soon.

    2. Re:Card to Card payments by nabsltd · · Score: 5, Insightful

      Paypal has grown to be a behemoth that has elbowed it's way into every online merchant's payment options, for some strange reason (what good is it unless you for some reason already have money stored at the bank of paypal?).

      I can pay using Paypal, Google Checkout, etc., without ever giving my credit card number out to random websites.

      That's huge, as I don't have to trust the website quite as much. It still may be a scam of some sort, but at most I would be out the cost of that single transaction, since they won't be able to run up charges on my card.

    3. Re:Card to Card payments by Anonymous Coward · · Score: 5, Insightful

      Basally the problem is banks and credit card companies don't understand the concept of information security. like at all.

      Their transaction security model is vulnerable to replay attack (once a merchant has my credit card number and billing address they can charge my card whenever they want)

      What PayPal does is require me to log into their service and authorize any transaction before it will be executed. Thus they act as a buffer between my dangerously incompetent credit card company and the potentially villainous merchant with whom I am dealing.

      All banks and credit card companies have to do to kill PayPall forever is bring their transaction security model out of the 19th century.

    4. Re: Card to Card payments by Anonymous Coward · · Score: 5, Insightful

      USD doesn't work so well when the lights go out either. All the notes are the same size - unlike every other currency I've handled there's no easy way to tell them apart without being able to see them.

  2. No idea who to root for in this... by Lendrick · · Score: 5, Insightful

    Paypal and Mastercard are both horrible companies. I suppose I should side with the company trying not to share my personal data, but Paypal is incredibly sleazy and dishonest in its own right.

    1. Re:No idea who to root for in this... by Beerdood · · Score: 5, Interesting

      I know! It's like watching two school bullies argues start to argue over something, as you're secretly hoping they'll get into a fight and both be suspended.

      I could see MasterCard taking more of the hit for this though, Paypal funds can be added without any fee from a bank account, or with some new MoneyPak thing I'm just reading about for the first time - I forsee more people using this option if they have hefty fees when transferring from a credit card (Because the whole reason you're using Paypal is because you can't use your credit card in the first place, the money will be transferred if it has to be).

      --
      Global warming and other natural disasters are a direct effect of the shrinking number of pirates - Gospel of the FSM
  3. Re:Pass the buck by Krojack · · Score: 5, Insightful

    I think on every transaction PP should list:

    PayPal Transaction fee: $x.xx
    *Mastercard Fee: $x.xx

    * This fee is due to PayPal refusing to tell Mastercard what it is you're buying so they are now charging PayPal more. Their end cost has not increased, they are just greedy and want more money.

  4. Re:SLightly confusing summary by Anonymous Coward · · Score: 5, Interesting

    MasterCard already has access to personal data from the card issuing side (they can know everything your bank knows about you, which is considerably more than what a merchant might know). The issue here is that PayPal is acting as a screen so MasterCard/Visa cannot be sure of the nature of the downstream merchant (this is the data they are not getting from PayPal). This has monetary consequences for MasterCard because some of their fee structures differ by industry, but more significantly they track chargeback and loss rates by merchant industry. I think this is less about monetizing purchasing data (though there is certainly an element of that) and more about scaling their fee structure to known loss paterns.

  5. Please do by rduke15 · · Score: 5, Funny

    <quote>I've always wanted the ability to painlessly send someone money</quote>

    Please do! Here is my IBAN number: CH14 0025 5255 F665 2263 0

    Thanks.