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Digital wallet operators, like Google, PayPal, and others, should be charged a fee for offering such a service, according to Visa CEO Charlie Scharf.
Speaking at the Barclays Emerging Payments Forum yesterday, Scharf said “it is totally appropriate” for credit card companies to charge digital wallet operators a fee on all transactions, according to Reuters, which was in attendance.
Scharf’s comments come after eBay revealed in a February regulatory filing that MasterCard was planning to charge it a fee for its digital wallet service starting in June. The actual amount PayPal pays isn’t expected to be huge, but it has called into question whether card issuers are trying to double dip.
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Currently, mobile wallets require credit cards to work. So, each time a person pays for a product with one of those wallets, they’re still taking credit from a card. Fees are then paid to the card issuers for that transaction. PayPal, like other providers, pays boatloads of fees for those transactions.
However, the card companies argue that digital wallets can be a logistical nightmare as they try to assign rewards points and accommodate other programs they’ve set up for transactions. The companies argue that so-called “staged” services, like Google Wallet, PayPal, and even Square, share less information than they need to handle the customer-service side of transactions.
In his discussion, Scharf didn’t say whether Visa will actually assess a fee. However, the credit card companies have digital wallet providers over a barrel — unless companies like PayPal and Google want to build their own successful card networks (a nearly impossible task), they’ll need the support of issuers to see their services succeed.
