He argues that undermining Visa and Mastercard in the UK would create a vacuum for big tech and companies utilising emerging technology to dominate the payments landscape and destabilise a healthy ecosystem.
He says that the UK could face a payments landscape like China. That would mean big tech firms monopolising the market, exploiting consumer data and exerting significant influence.
Andzejevski, whose fintech provided international payment services in 39 currencies last year, believes the UK must avoid following suit.
Rafal Andzejevski said: “Capping Visa and Mastercard fees would reduce the financial burden merchants typically pass on to consumers. But new regulations would unsettle an otherwise healthy payments ecosystem, which would be more damaging in the long-term.”
Visa and Mastercard set the benchmark for secure and efficient payments
Both firms have facilitated UK transactions for several decades. They are accepted by nearly every retailer and set the benchmark for a secure and efficient payments landscape. But Andzejevski warns undermining their position would only fragment the broader ecosystem. And it would enable big tech firms to consolidate a lot of sensitive data. Andzejevski believes this could open the door for them to penetrate the market like WeChat and Alipay have done in China.
In China, WeChat and Alipay account for 91% of all digital payments. In the UK, Apple boasts the highest Point-of-Sale penetration globally at 70% in-store and 37% online. But, Andzejevski emphasises a payments landscape dominated by big tech would spell the end of fair competition.
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UK must ensure that Apple’s growth does not go unchecked
Andzejevski added: “The lack of major card scheme providers like Visa and Mastercard left an open goal for WeChat and Alipay to dominate payments in China. This was despite the introduction of UnionPay in the country. This was the government’s attempt to unify China’s credit card and payment networks. If the UK government isn’t mandated to protect Visa and Mastercard, it could create a window for big tech firms to solidify their market presence and become leading players.
“Apple Cash already exists as a digital payments card in the US, operating under the Discover network. It won’t be long until Apple sets up its own payments network here. The decades-long partnerships Visa and Mastercard established with retailers and banks in the UK created a robust payments system. That works for consumers and businesses.”
AliPay and WeChat have come under scrutiny in recent years for anti-competitive practices. Andzejevski warns the UK and other Western markets face a similar situation.
“If Apple continues to gain access to sensitive financial data with an extended reach over the payments landscape, it could use it to its advantage to gain an uncompetitive advantage within the tech sector too.
“Emerging technology such as AI and ML is still in the early stages of development. Unleashing this on the payment ecosystem unchecked would pave the way for fraudulent activity such as data breaches and scams.”
Government, regulators must find the right balance
“The UK government and its regulators must find the right balance. One that promotes healthy competition and safeguards the health of our financial ecosystem. Instead of following in the US’s footsteps in intervening in the payment ecosystem, we must promote and support payment start-ups so they can grow and prosper.
“Visa and Mastercard act as the last line of defence against a payments ecosystem that would closely resemble China’s. Putting the brakes on regulation, for now, is the best way to keep big tech and emerging technology in check.”