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Prepaid Revolution part 2: 6 types players in this game and where the puck is headed.

Prepaid debit cards are very different from credit cards and traditional bank accounts, as we explained in Part 1.

These simple but profound changes have a big impact on all 6 players in this ecosystem:

Card Processor 101

If you are a bank (legacy or neo) or a niche Fintech that wants to issue a card that is accepted at merchants that take Visa, Mastercard, American Express or Discover, you may want to use a company offering Card Processor services such as:

Merchant Acquirer 101

Merchant Acquirers (often banks) are the interface between merchants and card networks, providing services such as customer authentication, payment authorisation and settlement. The devil as always is in the details of errors, fraud prevention, refunds and cross border transactions.

Where the puck is heading.

– America is different from Europe as it relates to the interchange rates aka swipe fees that merchants pay. In March 2015, the European Parliament voted to cap interchange fees to 0.3% for credit cards and to 0.2% for debit cards. Some US companies have decided against doing business in Europe due to the low interchange rates. During the pandemic when merchants need all the help they can get, this matters. Which way Asia goes will be critical.

Stay tuned for Part 3 next week – what this will do for bank stocks.

Bernard Lunn is Editor and CEO of Daily Fintech and author of The Blockchain Economy

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