Opaque vendor pricing is causing wide variations in what financial institutions pay for debit card processing, according to new research from management consulting firm Cornerstone Advisors.
Debit card processing is huge business – debit card usage has increased at a 15.6% compounded annual growth rate over the last 14 years, and the total revenue from facilitating those payments is expected to jump from $117 billion in 2012 to $177 billion in 2022, the study found. That revenue comes primarily from the average 2% of every debit transaction that goes to payments networks, issuers and vendors.
But based on a review of 15,000 pricing points from thousands of vendor contracts, Cornerstone found that financial institutions are apparently paying up to five times as much as other institutions of similar size and transaction volumes because vendors keep their pricing opaque.
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