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that CFPB develop a comprehensive liability framework as "The percentage of customers who said they do not use
it works toward publishing its rule. mobile wallets because it is less convenient than a card
actually increased to 49% from 47% in 2022," researchers
"Consumers need to be confident in the safety and wrote. "One potential reason for this rise? The emergence
security of the overall system, and trust that their financial of contactless cards."
information and data is being used in accordance with
their wishes, as long as necessary to provide the service, Experts have remarked on the changes in commerce in
and that the data and information used is accurate and recent years, noting that we're no longer saying, "See you
up-to-date," he wrote. on the other side," to reappear minutes, days or weeks
later with a restaurant receipt, online order or monthly
Transparent lending merchant statement. Today, there is no other side. Service

Damon Kirk, CEO and co-founder of Obsidian Bank, stated providers and merchants are out in the open, processing
accurate, contextual data can help drive inclusive financial orders, mapping customer journeys and personalizing
services. Citing a recent study by the Federal Reserve, he the customer experience. Newer forms of commerce are
noted Black consumers applying for mortgages received gradually replacing opaque disappearing acts.
higher approvals from humans than bots, algorithms and Transparent fee structures
automated systems.
Allen Kopelman, CEO and co-founder of Nationwide
The Fed's August 2022 study, How Much Does Racial Payment Systems, wants to see more transparency in
Bias Affect Mortgage Lending? Evidence from Human and merchant account pricing beyond the usual promises
Algorithmic Credit Decisions, found racial and ethnic gaps in merchants hear from service providers. "Once upon
wealth and homeownership. In 2018 and 2019, for example, a time, quite a few companies said their pricing was
researchers found Black mortgage applicants were twice 'direct' or 'transparent' but that was before payment card
as likely as white applicants to be declined by lenders. interchange tables got complicated," he said. "With today's
statements, you practically need a master's degree to read
Commenting on the study, Kirk noted that automated and decipher them."
systems frequently missed information on Black
applicants, such as their 401Ks and stock portfolios. "As a Kopelman suggested too many merchants and processors
data company, how do you make sure that you're taking in conflate transparency with simplified pricing, when in
good data?" he said. "Especially when your outputs reflect fact these are two very different concepts. Millions of
missing information and personal biases." merchants have flat rates with industry-leading payfacs,
he noted, but how many have a clue about the margins
Steven Farrar, CFO and Obsidian co-founder agreed, PayPal, Square, Stripe, Shopify, Toast, and others are
stating transforming raw data into business insights is making?
essential for banks. "Advanced analytics can help financial
institutions understand customer behaviors so they can "They seem to think their flat rates are a transparent
figure out how to cater to them," he said. "Neobanks can pricing model, and how could 100 million merchants be
partner with companies focused on specific niches to wrong?" he asked. "Then consider how many merchants
effectively serve bank customers where they are." use some form of cash discount, surcharge or dual pricing
method, paying a flat fee and passing it on to customers.
Transparent payments I'm sure they feel the deals they are getting are transparent
What does transparency mean for the payments industry? because they've eliminated paying their own interchange
In recent years, invisibility was all the rage, with payments fees and assessments."
applications running unseen in the background, creating
magical customer experiences. Maybe they worked too Merchants who pay "cost-plus," with additional basis points
well: ride-hailing apps, instant credit decisioning and added to a transaction, may also believe their pricing is
pay-by-wearables went viral; people wanted to look transparent, Kopelman said. But if you look at how many
under the hood and see the magic behind the transaction. businesses are adopting payfac models, he added, it's clear
Meanwhile, credit cards, newly enhanced with contactless that technology is more important than pricing for most
and digital capabilities, remain popular with consumers, merchants and independent software vendors.
according to a January 2023 J.D. Power study.
"Merchants need to do the math by dividing total
The Banking and Payments Intelligence Report, co-authored by processing costs by their number of sales to get their true
Paul McAdam, senior director of banking and payments effective rate," he said. "In the end, transparency is in the
intelligence, and John Cabell, managing director of eye of the beholder."
payments intelligence, at J.D. Power, found cards a top Dale S. Laszig, senior staff writer at The Green Sheet and managing
choice among 3,588 bank customers surveyed in the first director at DSL Direct LLC, is a payments industry journalist and content
quarter of 2021 and third quarter of 2022. strategist. Connect via email dale@dsldirectllc.com, LinkedIn www.
linkedin.com/in/dalelaszig/ and Twitter @DSLdirect.
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