Exclusive Interview with Rafal Andzejevski, Founder & CEO, PayAlly: The Visa and Mastercard duopoly can coexist alongside, and even help to grow, smaller payment networks.

TDB: Why is it important to prevent a reduction in Visa and Mastercard processing fees? Won’t end users such as consumers and merchants ultimately benefit in terms of lowered transaction costs?

Rafal Andzejevski, Founder & CEO, PayAlly: Visa and Mastercard have been facilitating global transactions for several decades; in fact, they’ve been dominating the payments industry – and seeing off competitors like AmEx – since the 1960s. They’ve established a duopoly across the sector – and, in 2022, together enabled nearly 500 billion purchase transactions globally (Statista). If anything, their sector dominance has ensured a secure and efficient payments landscape.

Of course, if – like in the US – the UK introduced cuts to Visa and Mastercard processing fees, consumers and merchants would benefit – that’s from an initial view, at least. The financial burden merchants typically pass onto consumers would be reduced – and peoples’ money would go further.

But the downsides drastically outweigh these benefits.

Payments, like the computing and mobile phone manufacturing sectors, would just become another sector for Big Tech to monopolise. They would gain a whole new wealth of customer data, but, this time, would gain access to peoples’ financial data – increasing the severity of potential data leaks and breaches.

So, while I understand there are pros and cons to processing fees, undermining Visa and Mastercard would bring severe consequences. In fact, a reduction in their processing fees would only buck a growing trend of hostility towards the two giants. And that’s why we should prevent this from happening.

At the end of the day, I think the market should adjust prices – not the regulators. I’m confident that the Visa and Mastercard duopoly can coexist alongside, and even help to grow, smaller payment networks. Doing so will stimulate activity in the market, increase friendly competition, and in turn lower processing fees organically. But, if regulators step in and cap prices themselves, they will actually end up discouraging innovation in the sector, slowing down the development and growth of the industry.

TDB: The international card schemes are also privy to a wealth of customer data. How will the entry of big-tech companies change this paradigm?

Rafal Andzejevski: Of course, Visa and Mastercard – along with other card schemes – have access to customer data. But, that said, they don’t have nearly as much information as Big Tech do; after all, Visa and Mastercard only really operate numbers – not names, surnames, IP addresses and so on.

It may sound clichéd, but we live on our phones – and, in this way, interact with Big Tech systems every day. These firms have access to all consumer data: our browsing history, our social media activity, our unique identifiers, and our personal information. Tech giants already hold vast amounts of personal data – and, if they became issuers, all of our data would be at their disposal.

As I said, if Big Tech took the place of Visa and Mastercard in the payments industry, these firms would have consolidated the majority of our sensitive data. And, the more data they have, the bigger the risks for the consumer. The consequences of data breaches would radically worsen. People would be exposed to theft attempts and unprecedented financial loss, affecting their lives, plans and ambitions all at once.

But, beyond that, increasing their power in the industry could lead to further anti-competitive behaviour. In surveys conducted by Statista, in Q3 2023, 70% of respondents said they used Apple Pay for in-store or other POS payments – and 39% said the used it for online payments.

These numbers would only increase if Visa and Mastercard were shoved off their shared throne. Big Tech could then solidify their market presence in payments – and, in turn, tighten their hold on the tech sector, gaining exclusive access to a new set of consumer data.

This would give Big Tech another uncompetitive advantage over other budding players in the tech sector – and turn the payments landscape into one similar to China’s. An impenetrable ecosystem dominated by heavyweights like WeChat and Alipay.

TDB: Mastercard recently secured approval for domestic payments processing in China – a payments market dominated by local heavyweights. Likewise, shouldn’t more competition and innovation be encouraged in the UK’s payments landscape to unlock new growth?

Rafal Andzejevski: Of course, competition should be encouraged across most sectors; and I would welcome it in the payments industry, if it wouldn’t mean gifting the industry to Big Tech firms. We should be encouraging, promoting and supporting payment startups – and positioning them to have a real impact in the industry.

In a sector that truly affects peoples’ day-to-day transactions and livelihoods, the UK government and regulators need to strike the right balance. They need to both promote healthy competition as well as safeguard the health of the industry. So, while allowing Big Tech to strengthen their market share would increase competition, it might simultaneously lead to anti-competitive behaviour further down the line.

That said, with regard to Mastercard’s recent approval in China, who’s to say this will break up the dominance of WeChat and Alipay? According to PYMNTS, WeChat and Alipay own 91% of China’s digital payments sector, exhibiting a staggering dominance across the country’s transactions. I don’t see any other player – like Mastercard – managing to break up their dominance in China.

TDB: What security concerns do emerging technologies such as AI/ML pose in the context of payments? Please elaborate.

Rafal Andzejevski: The issue with emerging technologies like AI and ML exists in the name – ‘emerging’. They’re in their early stage of development – and it would be a mistake to unleash these technologies onto the industry for names-sake. When I say that, I mean AI and ML are quite trendy at the moment – every headline, every social media post, every casual conversation mentions them. So, while they provide quite a nice marketing buzzword, these technologies could cause more damage than good.

AI is still prone to mistakes – and while I won’t deny its ability to take up mundane, efficient tasks with ease, it could slip up when dealing with highly sensitive user data. Issues in data privacy could lead to increased fraudulent activity in the sector – and more cases of data breaches, scams, and perhaps even identity thefts.

AI – I’m sure – will be a great thing for the industry in the years to come. It will inevitably lead to more efficient data analysis, a quicker understanding of risk and improved personalised financial advice for customers. But, until the technologies are perfected, it will always pose risks to peoples’ finances. And, at the end of the day, security should always be the number one concern for all players in the payments industry.

About Rafal Andzejevski

Rafal Andzejevski is an international entrepreneur and Founder and CEO at PayAlly. He founded London-based PayAlly in 2017 to provide an exclusive, flexible, and customer-centric service to internationally engaged firms that are under-served by high-street banks and whose unique needs aren’t catered to by impersonal fintech startups. He is also Chairman of Andzejevski Holding, a group of companies across diverse sectors, including real estate, finance, logistics, and wholesale trade. He has founded and built numerous successful businesses across London, Poland, Lithuania, and Estonia.

Shopping Cart

Media Kit

    Data Protection

    Personal Data (“Data”) submitted for Media Kit (“Media Kit”), and/or collected in the form of first name, last name, email address and other contact details may be used for the purposes of inviting you to future events and for reaching out to you with content which may be of interest to you. For these purposes, The Digital Banker will share the Data with our associate companies (including event and content sponsors) to promote their products and services. You will also be automatically subscribed as a user on www.thedigitalbanker.com. If you would like to opt-out, email us at [email protected].

    By clicking Submit, you acknowledge that you consent/ have sufficient informed consent to the collection, use and disclosure of Data as set out above.

    The Digital Banker Summit

    Moving on from FTX: is 2023 the year of CBDCs?

    Indonesia, Jakarta

    Thailand, Bangkok

    Philippines, Manila

    Contact Us

      Data Protection

      The information you provide will be held on our database and may be used to keep you informed of our and our associate companies’ products and for selected third party mailings. Please tick the box if you would prefer not to be contacted for these purposes:

      Request Nomination Pack

        Data Protection

        The information you provide will be held on our database and may be used to keep you informed of our and our associate companies’ products and for selected third party mailings. Please tick the box if you would prefer not to be contacted for these purposes:

        Registration Form

          Data Protection

          The information you provide will be held on our database and may be used to keep you informed of our and our associate companies’ products and for selected third party mailings. Please tick the box if you would prefer not to be contacted for these purposes:

          Registration Form

            Data Protection

            The information you provide will be held on our database and may be used to keep you informed of our and our associate companies’ products and for selected third party mailings. Please tick the box if you would prefer not to be contacted for these purposes:

            Registration Form

              Data Protection

              The information you provide will be held on our database and may be used to keep you informed of our and our associate companies’ products and for selected third party mailings. Please tick the box if you would prefer not to be contacted for these purposes:

              Registration Form

                Data Protection

                The information you provide will be held on our database and may be used to keep you informed of our and our associate companies’ products and for selected third party mailings. Please tick the box if you would prefer not to be contacted for these purposes:

                Registration Form

                  Data Protection

                  The information you provide will be held on our database and may be used to keep you informed of our and our associate companies’ products and for selected third party mailings. Please tick the box if you would prefer not to be contacted for these purposes:

                  The world’s preeminent Private Banks and Wealth Managers are demonstrating a committed drive in innovation, advisory, new products and services to meet the sophisticated needs of their clients.

                  COVID-19
                  Amid economic activity revival on the back of the Covid-19 vaccine program, organisations moving from business continuity plans to stable working environments, together with the slightest improvement in unemployment numbers, forced the world to adjust to new realities. Coming to terms with the “new normal”, global investors are now on the look-out for attractive and stable investment opportunities.

                  Needs of Private Wealth customers and families worldwide have drastically changed due to the pandemic and banks have had to accelerate efforts to deploy a multi-channel service strategy and safeguard clients’ businesses and wealth against negative impacts of economic uncertainly.

                  The Global Private Banking Innovation Awards will recognise the world’s best private banks, wealth managers and asset managers that are championing innovation across advisory, service, products, customer experience and more.

                  Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. 

                  Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum.

                  Request Nomination Pack

                  Error: Contact form not found.