The big benefit of this “switch” for the merchant acquirer is that, in the same way he can connect up to one merchant through this switch, he can connect up to any of the others. For the merchant looking to connect to another merchant acquirer, the switching costs of replacing protocols and leased lines have suddenly vanished.
As a merchant, you can go to anyone of your suppliers and say “Ho ho, things have changed. Instead of it taking me three months to swap you out for another guy, it’s only going to take me three minutes.”
The pricing power goes to the merchant now. That’s the type of thing that happens with Web services, and when you put things through an intermediary who can connect you to anyone of those suppliers. We do this in the area of payment and I can’t give you additional product plans, but there are lots of opportunities for the same type of service in Web services.
When we built Visa’s Acquirer Services (now Vital Processing Services – a joint venture between Visa USA and TSYS) back in the mid-80’s, one of the selling points to merchants (mentioned very quietly!) was that a merchant could connect directly to Visa technically and then broker their business relationship among acquiring banks essentially at will. Of course, merchants directly connected to First Data Merchant Services can do almost the same thing today because of FDMS’ multiple alliance bank partners.