Payments Strategic Sourcing

McGovern Smith updated its Processor Cost Index1 for 2023 and the results show that processor operating costs per transaction fell by 5.1%.  This is the second straight year that processor operating costs per transaction fell by a healthy amount and were not otherwise influenced by Covid-19. While every processor has its own unique situation or…

McGovern Smith Advisors has analyzed the proposed cap on the base component of debit card interchange and by all appearances the Federal Reserve staff responsible for analyzing the data and recommending interchange do not appear to be honest brokers in the matter. The following is our view on potential dramatic changes to the largest component…

McGovern Smith’s analysis of covered U.S. issuers (i.e., those financial institutions with over $100 billion in assets under the proposed act) and the network fees tied to their credit card volume suggests a pending storm for exempt and some covered financial institutions. While credit interchange declines get the headline (and deservedly so after debit and…

The payments industry has seen dramatic changes over the past few years with industry consolidation and the Covid-19 pandemic. However, after the dust has settled, card processor operating costs (on a per transaction basis) continue to decline highlighting the inherent scale in card issuer processing businesses. And so long as credit and debit card processing…