Daniel Wicharz on success of credit card payments

Daniel Wicharz is the vice president of an international aquiring bank. We talked with him about about the success of credit card payments in Europe and internationally at the Point of Sales and E-Commerce.

What do you think contributes to the success of credit card payments in Europe and Internationally at Point of Sales and E-Commerce?

People want to pay hassle free. They do not intend to send a wire transfer to a seller upfront for good reasons. 1st it is simply too much hassle and 2nd it is also risky. Especially when you pay a seller abroad who you do not know well, then obviously it is extremely dangerous sending money in the first place. With cards you always have the option of a chargeback and keep the seller liable for delivery.

How is Interchange fees important and necessary?

Interchanges are necessary to finance the card issuing banks. However the interchanges used to be very high in the past. This changed in December 2015 when due to the PSD2 the interchanges got regulated by the EU for private credit cards. Now the interchanges for private cards in EUR cannot be higher than 0.3% for credit cards and 0.2% for prepaid cards. Obviously these lower interchanges decrease the cost of credit cards to the merchants and boost the acceptance rate in Europe.

Which is a good example of excelleration of business due to the acceptance of credit cards and payment trends?

A good example is ticket sales. I am not able to disclose the name, but I know a high profile motor race institution that used to accept direct debits only. It was almost impossible for a visitor from outside Germany to pay online and to make sure he gets a ticket when he arrives. With card acceptance this issue was solved and the conversion rate on the website dramatically improved.

Do you think a cashless society is a good thing? What are its dangers?

It is good especially for everyone especially since it does decrease fraud and crime. The only danger I see is that some smaller business might need more time and help to move from cash to digital money. These ones need to get up to speed in terms of payments. Also very small sellers like people that sell newspapers on the street. Already now I see that many people simply do not have coins anymore and it becomes more and more difficult to get change for a 50 EUR note. So these small businesses need to go cash free as well. I see there a big opportunity for the contactless cards technology.