I believe the time has come. Since Consumer is at the center of any business, let me start from there. In a recent study by Qualcomm, 29% of the Americans said that the phone is the first and last thing they look at every day. In another research, atleast 50% of the consumers will use 2 or more devices in their purchase process according to IBM. A research by Mapdom said more than half of those who purchased as a result of marketing message on their smartphone, did so on the device itself. To me these three (and others discussed time and again) are some of the most important reasons why, after a lot of ups and downs and doubts about digital/mobile payments, are resulting in change. So Lets Talk Payments and understand why I believe now the time has come and how the evolution is happening.
Its the focus on the consumer that is bringing about the change - its not a dramatic turn of events, but iterations including lots of failures, and companies painfully changing focus. For the first time in 2000 years or more the coin and cash might have to co-exist with its powerful cousin - The digital and mobile currency. For last 10 years digital payments have been really trying to make in-roads. With the advent of 9 key enabling technologies it seems to be finally attracting the consumer. Consumers are now coming to automatically expect businesses to offer alternatives to the traditional cash register, from contactless mobile payments, to card readers, to mobile apps and iPad mounted payment systems. And that's driving change in both offline (proximity) and online (remote+) payments.
The second most important entity who is embracing this change are the Retailers and merchants:
A report by BCG says that global evolution toward more online payments is playing a central role in driving growth in payments-industry revenue pools. In Europe, the revenue pool for payment service providers alone is expected to reach around $1.5 billion by 2016, compared with about $0.8 billion in 2012. In order to thrive in the new environment, acquirers will need to adapt by developing the capabilities to serve pure online and multichannel merchants and continuing to drive improvement in their offerings and operations to cope with new market entrants.
Start-ups are embracing new payment technologies, latest Streamline research shows. The research shows one in two (50%) start-ups are trading using online and mobile wallets, compared to just 36% of business that are over three years old. This number rises to 68% when looking at card-accepting start-ups, suggesting that businesses that accept credit and debit card payments are most likely to adopt other innovative payment methods. The research also shows an increasing number of start-ups are offering contactless payment methods in store. This is likely to be a result of growing consumer demand for the technology.
Paypal and incumbents have risen to the occasion as well. Paypal has become so aggressive again that it is competing with players in every segment of modern payment systems. And that is an important driver of the growth for modern methods of payments.
Who said elephants can't dance? Banks are moving too. They started with mobile banking apps, and prepaid cards but are also looking at contact-less POS, NFC and cardless ATMs.
LTP View: Followings discussions are happening across the globe in banks, retailers, other merchants and technology companies.
Which of the 9 key enabling technologies to focus upon for coming up with alternative mode of payments?
How to make the best mobile wallet?
Build, buy or partner, whats the best way to approach the market and build the best business case?
How to go about providing a means to transact to the under-banked and the un-banked. Its a huge opportunity in emerging economies