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CMSPI – IAC State of the Industry Report
CMSPI – IAC State of the Industry Report
Section 1 Overview A Primer in Payments
The Numbers • $224bn
The estimated cost of fees paid by merchants to accept card payments in the U.S. in 2023, inclusive of interchange, network fees, and processor fees 6 • 2 percentage point How much higher the average cost of accepting a credit card transaction is in Japan than in the EU-12 7 • $49bn How much less U.S. merchants would have paid to accept 2023’s payments transactions if both fees and the payments mix had stayed at 2009 levels 8 • 45% The average share of the Merchant Service Charge attributable to interchange fees in Europe 9
The world has come a long way since 1950, when Frank McNamara forgot his wallet while out to dinner in New York and the first payment card was born. 4 Today, in many countries those cards are responsible for the vast majority of payments, with 687 billion global card network transactions occurring in 2023. 5 Behind the card, however, lies a complex web of infrastructure, rules and practices that have shaped the structure of the payments industry as we know it. In this section of CMSPI’s State of the Industry Report, we provide the backdrop that onlookers need to understand the payments market of today.
The Questions • Which parties are involved in making a transaction happen, and how are they paid?
• How has the cost of payments acceptance grown over time? • How do card fees differ by country and payment channel? • What are dual and single-message transactions?
The Findings • Of the countries analyzed, Japan and the U.S. have some of the highest fees for accepting card payments • Costs to accept card payments can be significantly higher online • In the absence of regulation or co-badging, the interchange and network components of card fees are largely non-negotiable for merchants
6 CMSPI estimates and analysis 7 CMSPI estimates and analysis 8 CMSPI estimates and analysis 9 CMSPI estimates and analysis
4 When Were Credit Cards Invented? | Capital One 5 https://www.statista.com/statistics/261327/number-of-per-card-credit-card-transactions-worldwide-by-brand- as-of-2011/#:~:text=Nearly%20four%20out%20of%2010,transactions%20per%20day%20in%202023.
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