Citigroup makes its move in $90 billion battle over swipe fees
Citigroup Inc. is jumping into the battle over the $90 billion in swipe fees that merchants pay each year to process debit and credit cards.
The bank is developing a new digital consumer-payments business that will allow large merchants to collect from cards, mobile wallets and bank-account transfers. Citigroup will work with Mastercard Inc.’s payment-gateway services to connect with payment processors and mobile wallets around the world.
Citigroup’s new product could address the growing concern among U.S. merchants that have been looking for a way to lower the amount they spend on electronic payments, especially through solutions that connect directly to a consumer’s bank account, avoiding traditional credit and debit card networks.
Citigroup’s treasury and trade solutions unit has long helped large multinational corporations pay overseas suppliers and partners. They’re going to take that same technology and help large merchants who want to sell their goods to foreign consumers. This kind of cross-border payment capability is something other merchants have been investing in, most notably with Ant Financial’s purchase of London’s WorldFirst.
The payment processing space has been rapidly consolidating. In January, Fiserv Inc. agreed to pay $22 billion for First Data Corp. Earlier this month, Fidelity National Information Services Inc. said it will buy Worldpay Inc. in a $43 billion deal.
“This is a new and rapidly growing space and we have taken a very comprehensive and innovative approach which we believe will position Citi as a leader among both existing and new market participants,” Manish Kohli, Citigroup’s global head of payments and receivables at the bank’s treasury and trade solutions unit, said in the statement.