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MasterCard joins Visa in its war against cash

Categories : Cash is efficient
August 1, 2017
Tags : Card payments, US, Visa, War on Cash
Visa and MasterCard concluded several deals to promote card payments to cash's detriment..
Communication Team / Equipo de Comunicación

Earlier this month, Visa announced a new initiative aiming to increase the number of card transactions to cash’s detriment. Indeed, the credit card provider will offer a $10,000 reward to a selection of 50 restaurants that agreed to refuse cash transactions in the future. The objective is to encourage consumers using their credit card rather than paper money for more purchases in order to accelerate the move to a cashless society – a dream for card providers. Recently, MasterCard also decided to attack cash’s market to push card payments by signing agreements with third-party payment providers in several sectors including rent and education.

Visa and MasterCard’s share of the payment industry has expanded significantly over the past years. In 2016, the two companies handled about $4.3 trillion in payments only in the US, figures that practically doubled over the past decade. Nevertheless, the amount of cash in circulation has risen at the same pace, and studies demonstrate that cash remains the most used payment instrument in the US, especially for small-value transactions. To tackle the problem, credit card providers have thus decided to promote card payments more aggressively, encouraging retailers to refuse cash. Ajay Banga – CEO at MasterCard – is known to support the demise of cash actively.

Nevertheless, various retailers are not willing to deprive consumers of a payment method that they might prefer and chose to safeguard their freedom of choice. In addition, merchants usually try to avoid fees inherent to card payments, which range from 22 cents for debit cards to 2% of the transaction for credit card purchases. Finally, the lobbying activities performed by Visa and MasterCard have extremely prejudicial consequences for the unbanked people, who would thus not be able to visit certain restaurants and retailers. As a reminder, there are about 10 million unbanked households in the US.

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