Durbin, Merchants, and ConsumersTheodore Iacobuzio |
Our friends at PYMNTS.com have an interesting item about a recent gathering of card not present (CNP) merchants at the Direct Response Forum in San Diego. Fully 41 percent of merchants surveyed said they had no plans to pass any Durbin “savings” back to consumers.
The rest were “undecided”. If another 10 percent decide to keep the money, then that’s a majority. If we take a more generous (if that’s the right word) estimate, and split the remaining 59 percent down the middle, then 70 percent of merchants, when they do decide, won’t pass on the money to consumers.
Winston Churchill once told his daughter, Sarah, “Never, ever, say ‘I told you so’ to anybody” (if you doubt his sincerity, you should read his words to the House on Neville Chamberlain’s death). Taking a cue from our betters, we’ll forgo pointing out we said as much regarding likely merchant response to the passage of Durbin (this is called having your cake and eating it, too).
The more interesting nugget, in the sense of being new, is further down in the PYMNTS.com piece, where we’re told, “The DRF survey also revealed that many CNP merchants aren’t aware of how much of their sales comes [sic] from cards.”
This lack of knowledge as to the payments mix on the part of CNP merchants supports some work the MasterCard Global Insights team is preparing on cross-border e-commerce. Online merchants often simply don’t know how their customers pay for goods, and this means they are missing a key variable in their own profitability model.
Whether it’s credit, debit, direct debit, or any other of a number of choices a consumer can make, it behooves retailers to understand what is really the best deal for consumers, because it could also be the best deal for them, cross-border or domestic.