The companies involved in payment card processing serve mutually exclusive roles and extract a share of the transaction fee. This fee is called “interchange,” and has been variously regulated by the European Union (Interchange Fee Regulation, April 2015), and the Federal Reserve (Durbin Amendment, July 2010).
Payment cards also mandate a secondary network provided by entities called “card associations.” Card associations work with payment processors to conduct the three broad stages of a payment card transaction: authorization (verifying funds in accounts on either side of a transaction), clearing (transferring funds between banks after the exchange of goods or services) and settlement (paying a merchant).
In order to accept payment cards, merchants incur disproportionately high processing fees which are often one of their largest operational costs.
In 2012, responding to these rising processing fees, some of the largest merchants in the US — including Walmart, Target, Best Buy, CVS and 7-Eleven — created a cooperative organization called Merchant Customer Exchange (MCX), with the charter of developing an ACH-backed payment instrument to avoid interchange fees. After three years of continuous merchant investment and delayed development, the MCX mobile app never exited a pilot phase.
Although it was successful at reducing merchant costs of processing, MCX was never able to deliver a compelling consumer value proposition. In 2017, JP Morgan Chase acquired the MCX technology to integrate with its existing Chase Pay system.
In the past decade, payment card processing fees have skyrocketed for two main reasons: first, because of an increase in fraud, including losses that are paid by issuing banks when they reimburse their customers for unauthorized charges; and second, because of the consumer demand for better card benefits and rewards on high-end credit card products.
The PDX platform and payments app will open up cryptocurrency to a vastly larger potential active audience and making it possible to freely and easily spend all traded cryptocurrencies for the first time through a single app. The PDX payments app will rapidly increase crypto mainstream adoption, while shifting the focus from speculation, to payments and investment.
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