The Price of Staying the Same

The European Commission is once again scrutinizing Visa and Mastercard’s fee structures, citing concerns over transparency and retailer choice. Meanwhile, U.S. banks are struggling to meet surging demand for instant payments, with legacy systems and existing apps like Zelle slowing progress. FIS partners with Kipp to cut down on costly NSF declines, and Block prepares to launch native bitcoin payments through Square, advancing its vision for peer-to-peer commerce.

Welcome to Today in Payments, I’m your host, Patti Murphy, here with your weekly dose of payments notes.

EU Rekindles Scrutiny of Visa and Mastercard Fees

The European Commission’s antitrust authorities are once again examining the fee structures of Visa and Mastercard. According to Bloomberg and several European news outlets, the Commission has circulated inquiries to market participants, focusing on the fees imposed on financial institutions that enable merchant access to the card networks.

This is far from the first time the card brands have come under fire in the EU. Less than a decade ago, Mastercard was fined $648.3 million and both brands agreed to cap interchange fees—0.3% for credit cards and 0.2% for debit.

The current line of questioning appears to center on three things:

• Whether retailers have meaningful choice in accepting Visa and Mastercard,

• The value provided in return for the fees, and

• How transparent those fees are.

This renewed attention follows comments from ECB President Christine Lagarde, who emphasized the need to reduce the bloc’s dependency on foreign payment providers—suggesting a digital euro may be one path toward that goal.

While the Commission has not confirmed an investigation, it has also declined to deny it. The move comes as regulatory scrutiny around interchange fees remains a global issue—highlighted by the U.S. courts recently rejecting a $30 billion settlement between Visa, Mastercard, and American retailers.

U.S. Banks Fall Behind on Instant Payments

New research from Red Compass Labs suggests that U.S. banks are not keeping pace with the demand for instant payments—despite significant pressure from both corporate and retail customers.

Key findings from their survey of 300 senior payments professionals:

• 63% of corporate bankers report strong demand for instant payment options.

• Just under one-third of U.S. banks have adopted either RTP or FedNow—the nation’s primary instant payment rails.

• 53% say both consumer and corporate customers are pushing for faster payment solutions.

What’s holding them back? A few major hurdles:

• Legacy tech infrastructures (34%) make upgrades difficult.

• Concerns about 24/7 operational demands (34%).

• Potential revenue cannibalization (32%).

• Confusion over choosing between RTP and FedNow.

Compounding the delay is the prevalence of apps like Zelle, Venmo, Cash App, and PayPal—which offer near-instant capabilities that many banks see as “good enough” for now.

FIS and Kipp Team Up to Tackle NSF Declines

FIS has announced a new partnership with Letskipp Ltd. (Kipp) aimed at reducing card declines caused by insufficient funds—a problem that accounts for 57% of all declines and costs U.S. banks an estimated $300 billion annually.

The solution? A novel NSF authorization model that allows transactions to be approved even when accounts lack sufficient funds—without charging overdraft fees. Merchants can opt to pay a premium to ensure the sale goes through, preserving the customer experience and recovering lost revenue.

“This partnership underscores FIS’ commitment to helping our clients unlock new revenue streams and deliver smooth payment experiences,” said Jim Johnson, Co-President of Banking Solutions at FIS. “Our NSF authorization solution with Kipp tackles a key point of friction in the payments journey.”

Square to Launch Native Bitcoin Payments

Block, the parent company of Square, is preparing to enable bitcoin payments directly via Square hardware. The rollout will begin in the second half of 2025 and is expected to reach all eligible Square sellers by 2026, pending regulatory approvals.

Building on its Bitcoin Conversions feature (launched in 2024), this new native Bitcoin For Businesses offering will let customers pay simply by scanning a QR code at checkout. Powered by the Lightning Network, the system supports near-instant settlement, and Square will handle all backend complexity—including real-time FX rates and confirmations.

The move supports Bitcoin’s founding vision as a peer-to-peer payment network—and positions Square to serve the growing cohort of crypto-enthusiastic merchants and consumers.

That’s all for Today in Payments. Stay tuned for your weekly dose of payments notes.