The Cost Problem
Card payments are expensive relative to alternatives. The average U.S. merchant pays approximately 2% to 3% of each transaction in total processing costs. Cross border transactions can exceed 5% when all fees are stacked. These costs are particularly burdensome for low margin businesses, micropayments, and B2B commerce.
Fraud, Chargebacks, and Settlement Speed
Card not present fraud remains the dominant form of payment fraud globally, costing more than USD 30 billion per year worldwide. The chargeback mechanism, while designed to protect consumers, imposes significant operational and financial burdens on merchants. Chargeback fees range from zero (Square) to USD 25 to USD 30 per dispute (Adyen, PayPal). "Friendly fraud," where consumers dispute legitimate purchases, is a growing problem. Excessive chargeback ratios trigger programme placement by card networks, higher fees, or account termination. Meanwhile, standard card payment settlement takes one to three business days, which compares poorly to the instant settlement offered by real time payment systems like UPI, PIX, and FedNow.
Financial Exclusion
An estimated 1.4 billion adults globally remain unbanked and cannot access card based payment infrastructure. In many developing markets, mobile money and A2A payment rails serve as the primary financial infrastructure for populations that traditional card networks cannot reach.