The card payments you use every day are stunting economic growth - it's time for an upgrade
By improving the way everyone transacts and money flows, we can unlock growth for the benefit of all.
The majority of purchases you make every day will be card payments whether you use physical plastic, Apple Pay, etc. That card system is old and inefficient with a primitive customer experience, extortive fees, weak control of fraud, and slow delivery of funds for the business.
All of these deficiencies stunt economic growth by increasing the cost of doing business, slowing the flow of money, preventing purchases from taking place, and exposing everyone to unnecessary risk from fraudsters.
Even though you don’t see it on your receipts, you are paying for all the shortcomings of the card system. The businesses you pay have to build the costs of card into their prices, passing them on to you. A good way to think about the cost of card payments is as a sales tax... except instead of funding government it’s paid to finance companies, simply to move a number from one account to another!
It doesn’t have to be like this. I know because I’ve spent over a decade working at leading consumer finance and payments startups. We now have the technology available to radically upgrade payments so that they are free, instant, and enable all sorts of new experiences and business opportunities. In doing so, we will unlock all the economic growth that is being stifled by cards.
I’ve outlined below some of the major shortcomings of card payments that we are fixing at Overlay:
Primitive User Experience
The user experience of card payments is outdated and clunky. Costing everyone time and killing off business opportunities due to poor user experiences.
Automatic Loyalty
Because card payments aren’t smart, loyalty points like coffee stamps can’t be included automatically when you tap to pay. Instead, you have to carry extra stamp cards or remember to use apps, leading to missed opportunities for rewards and a clunky fragmented experience.
Tap to pay at your local coffee shop should automatically collect and redeem your coffee stamps, which is exactly what we’ve built at Overlay:
Digital Receipts
Card payments don’t include digital receipt information so they require paper receipts that are harmful to the environment, surprisingly costly, and a pain to deal with.Â
Digital receipts can help people budget better, make admin such as filing expenses much simpler, and enable smart payment experiences like automatic loyalty and perks from retailers and brands.Â
Digital Disputes
Things sometimes go wrong with purchases. Resolving these disputes with card payments is cumbersome for all involved. Customers often need to call their bank, wait on hold, and businesses have to navigate lengthy processes with fraudulent claims. A payment method with a built-in digital, streamlined dispute system would save time, costs, and reduce frustration for both consumers and businesses.
Card fees: a hidden sales tax we all pay
Costly transaction fees associated with card payments function like a hidden sales tax.
Every card transaction charges a fee to the business, typically ranging from 1% to 3% of the transaction value. Businesses pass these fees onto you by increasing their prices. This means everyone ends up paying more for goods and services due to these hidden costs, which unnecessarily pushes up prices stifling consumer spending and overall economic growth.
In the UK, businesses have started an initiative called Axe the Card Tax - campaigning to eliminate the card levy by supporting competition from more efficient payment methods like Overlay.
Card fees are unfair on local independent businesses
Smaller independent businesses are disadvantaged by card fees because they are unfairly charged more than large businesses who can negotiate lower rates. For small businesses operating on thin margins these fees are a significant burden, reducing their ability to compete with corporate competition and invest in their own growth.
Cards make the rich richer and the poor poorer
The wealthy benefit from more generous cash-back rewards and travel points, which are funded by the card costs rolled into the price of goods which everyone pays equally. In effect, the least wealthy in society are paying for the wealthy’s generous credit card perks.
Slow Delivery of Funds to Business
Even after your card payment is successful, businesses don’t immediately receive the funds. The slow movement of funds in the card system is another significant drawback. often taking days to settle and causing cash flow problems for businesses. This can disrupt business operations and planning, especially for small businesses that rely on quick access to funds.
Fraud
The cost of fraud is another aspect of cards that ends up included in the prices everyone pays. This cost is estimated to be 6.5 cents per $100 spent.
  https://www.merchantsavvy.co.uk/payment-fraud-statistics/
We are able to significantly reduce fraud levels by moving beyond the old ways of the card system and making full use of modern technologies, such as the cryptographic hardware in your phone, to better protect you and the businesses you are purchasing from.
The old card system is no longer fit for purpose
Card payments are outdated, insecure, and costly. They hold back economic growth and place an unnecessary burden on consumers and businesses. Unlocking this growth potential is our core mission at Overlay.
By offering a new payment method that improves the user experience, enhances security, reduces fees, and speeds up settlement - we will drive more growth and create a more prosperous and fairer economy.
The time to move beyond cards is now.
Thanks to a confluence of recent technological developments, it is finally possible to deliver an alternative to traditional card payments. Specifically Apple’s recent opening up of NFC tap to pay, the emergence of instant account-to-account payments, and open banking payments. In a future post, I will explain how Overlay is bringing these together to offer a new method of payment that addresses all of the above problems with the card system.