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E-commerce Payments: Beyond Card Fees

November 7, 2023


The e-commerce industry is in perpetual evolution and payment systems are in the center of that change. Businesses have struggled with the escalation of card acceptance fees for the past decades because It became increasingly expensive in the digital era. As the financial industry is looking for sustainable solutions, the account to account payments offer a glimpse of hope.

The Burden of Card Fees in E-commerce

The digital revolution has intensified the challenges related to card payments. Merchants are not only faced with rising fees, but also with the very real threat of fraud and chargebacks. Complex card payment processes, combined with uneven implementation of account-to-account payment policies, result most of the time in customer dissatisfaction, leading to unpurchased baskets and lower conversion rates.

Regulatory Interventions and the Quest for Alternatives

The Payment Systems Regulatory Authority (PSR) has been among the major exponents of this change. The recent increase in fees, especially post-Brexit, has prompted the PSR to take a comprehensive view of the market.The goal is called, stimulating competition to offer more choices to businesses and consumers, and account-to-account payments are seen as a viable solution, enabling a fairer payment system

Dissecting the Revenue Streams of Card Payments

Account to account payments represent a new era in payments and has brought exponential growth with a significant number of transactions processed on a monthly basis. Nowadays, consumers seek a more direct and efficient way to pay. Account to account payments is at the center of this transformation in e-commerce.

The Allure of Account to Account Payments

The e-commerce journey does not end after payment, but has a continuation through the refund. Most online shoppers anticipate quick refund methods, and all expect the refund to be processed after an hour. If companies can hold instant refunds, they will likely enjoy greater customer loyalty. 

The Digital Transformation Imperative

The distinction between online and offline shopping is increasingly blurred.Consumers are always looking for the solution that best suits their need, this also includes innovation, such as online wallets, one-click payments, and app purchases. All of this improves the customer's shopping experience, which leads to more revenue

The Promise of Value, Safety, and Digital Innovation

Digital wallets like Apple Pay or Google Pay for example, have become omnipresent. They offer the convenience of instant payments whether in store or online, they dominate the financial landscape. Some projections are even indicating that over four billion global consumers will use them by 2023.

In-Depth Look at Interchange Fees

Each time a merchant processes a credit or debit card payment, they receive an interchange fee. That’s a major source of revenue for banks because these fees are set by card networks. For example, when a customer uses a specific bank’s card, that bank collects these fees to fund rewards programs for their clients. That can represent about 80% of the total processing cost for card payments. Merchants are looking to optimize their profit margins by enhancing payment processing to lower thes fees.

Revenue and Profit for Issuing Banks

Revenues and profits for issuing banks.Fees are a key source of revenue for issuing banks. The latter are not only a cost for merchants, but also a major revenue stream for card-issuing financial institutions.

Optimization Strategies

Merchants often implement strategies to reduce interchange fees. This is why it is important to choose payment methods with lower fees or negotiate better rates. The Durbin Amendment, for example, limited interchange fees for credit cards in the United States, making them less expensive than credit cards.


The concept of “super apps” is becoming popular because they offer a myriad of services that range from payments and shopping to utilities and entertainment and all that under one digital roof. As account to account payments continue to gain traction, it’s more than likely that it will become a main feature of those apps by offering a more direct and cost-effective payment system.

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