July 7, 2014
Safwan Zaheer is the Director of Mobile Payments and Commerce strategy at Barclays US where he leads commerce product planning and strategy team. The team launched a mobile payments wallet in two target markets in US receiving national recognition as the 1st bank to launch a mobile wallet. He is a graduate of MITand has over 15 years of experience building new businesses, strategic planning, and product management and launch.
In an exclusive interview with Let’s Talk Payments, he shared his insights on the payments market in general and banks therein in particular.
These are the excerpts of the interview:
LTP: When and how was the mobile payments unit of Barclays US established?
SZ: A small team was established in 2011 at Barclaycard, the payments business of Barclays, to launch a new line of businesswith mobile payments and commerce as its core product. The initiative was central to a disruptive growth plan to increase the banks payments market share in the US.
LTP: Why do we see so much of buzz around payments these days? What, according to you is driving the payments industry?
SZ: There is a lot happening in the industry and several emerging trends are driving changes in payments.
First, new technologies are driving a change in consumer behavior.Take for example mobile, which has become an important part of our daily lives, we can leave our leather wallets home but can’t think about leaving without our devices and if that’s the case how do we pay for goods and services? With thatcame the notion of using the mobile to pay –which started the evolution of mobile payments. This is an area where we will continue to see a lot of innovation and more and more startups and serviceswill continue to emerge.
Another area is payment security and fraud prevention; the recent breach at Target and Michaels has highlighted that present payment acceptance infrastructure is not secure. This is another area where we’ll continue to see lots of changes and services emerge. For e.g. recent efforts by MasterCard, Visa, and AMEX on ‘Tokenization’ is an attempt to address the problem.
Also, it’s not about Payments anymore since credit cards, cash, debit all work fine but rather solving a commerce problem between a consumer and merchant. Classic example is Uber where payments happen in the background and the real value is in solving the problem between the riders and the drivers by connecting them at the right time during the moment of the need.
Another buzz in the industry is ‘Omnichannel’ which is about reducing friction in payments whether consumers are shopping behind a PC, using a device’s browser, or making payments in-store at locations. Retailers are demanding these services today so continue to see a lot of innovation and new services emerging in this area.
So there is a lot of excitement in the industry now!
LTP: Are banks looking to launch their own mobile wallets in the market?
SZ: Most banks that launched their own mobile wallets are pulling back because they’ve come to the conclusion that the consumer demand on mobile wallets is wholly new and the merchant proposition is under developed. However, some banks will continue to test and experiment until they find the right customer ‘use case’ – which ultimately may not be a wallet.
Industry players that are best positioned to launch a mobile wallet and be successful are the likes of Apple, PayPal, and Amazon
LTP: There are more than 75 mobile wallet offerings just in the US. Then there are so many other products being launched from dynamic Magstripe to Beacons. Are these based on what consumer needs or are these are just solutions looking for a problem?
SZ: Yes, it’s crazy!Most if not all are solutions looking for a problem. Solutions like dynamic magstripe, such as one from LoopPay, that require consumers to purchase a wearable to attach to a device may not be the best answer as it creates a friction in the process; in this casevalue may be in integrating the dynamic magtripe technology within the mobile device’s chip.
LTP: NFC, QR Codes, Carrier billing or Beacons, what is your take on them? Which one of them do you think will survive in the long run?
SZ: All have their own advantages and disadvantages. The success will depend on simplicity and ease of use for the end user and acceptance by merchants. Take for example Starbucks: It now counts over 30% of its overall transactions via mobile and the basic technology it uses is ‘barcodes’ which is not the most sophisticated of them all.
As far as NFC is concerned it still lacks the scale and infrastructure but does provide consumers a ‘one-click’ like checkout experience via tap and pay. Carrier billing is suited and has mostly been successful in emerging countries with services such as mPesa. Beacons are interesting in that it provides an opportunity for merchants to connect with consumers in contained environments via micro-messages but Beacons too have limited use cases and I am not sure if they will find broad use in the industry.
Ultimately consumers will dictate the success as they will adopt those services that provide them ‘real value’ and are ‘easy to use’ – Starbucks and Uber as a case in point !