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The Future of Payments

Filene is doing a series of projects around the future of payments. There is so much information out there on the topic and we are honing in on the relevance of this question to credit unions. However, I thought I would take this opportunity to ask you to complete this sentence ... "the future of payments is..."

Categorized: 'Strategy'

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the future of payments is… something CUs better not count on for revenue!

The future of payments is embedded.

Short term, it will be embedded into things. Phones will be able to send and receive payment. Individual items will be able to receive payments. (Why am I not “buying” things as I put them in my cart?) Your car have a concept of payments. (I would imagine a not too distant day where the toll sticker I have on my car would be as outdated as stopping to deposit change. My car should be able to pay a gas pump as well.) I could go on.

I believe we are moving away from single points of sale to embedding the payments into the objects themselves.

Longer term, I seriously believe they will be embedded in us, whether it’s through biometric identification or actual small devices under the skin. I know it sounds sci-fi, but I have 2 very young daughters, and I honestly believe it will be an thing they will see in their lifetime.

Thanks for the fun exercise!

“The Future of Payments is mobile but…” Let’s look at the term ‘virtual wallet’ is it truly virtual? Yes, I can pay with my phone but I still have to have my wallet. Mobile Payments will struggle with adoption until people are able to have a digital/mobile id/drivers license or passport.

Example: I’m in my early 30’s (still look like a baby) so I have the privilege of showing my id when I purchase beer at the grocery store. So, now with mobile payments in the picture I have to pull my wallet (id) and phone (payment) out to make a transaction. Plus, I have to worry about forgetting two things at home instead of one.

How does this benefit the consumer?

Once digital/mobile ids exist Apple, Google, etc. will create a simple approach focusing on the customer/member experience via mobile payments. Putting an end to bulky back pockets and bottomless purses.


_From Jayson Peters, NuPath Community Credit Union_

The short version: The future of payments is mobile.

The enhanced:

I think the next 2-3 years we will see an exponential growth in both adoption of mobile payments technologies and the ways in which we can use those technologies. From a mobile wallet standpoint, everyone is racing to develop the front-runner in the field. We’ve seen multiple wallet apps enter the market in the last year alone, and I think until one emerges as the “Blu-Ray” of the group and the others go the way of “HD DVD” development and adoption will be slowed. Recently with Square developing their own wallet application (thus giving them 2 pieces of the mobile payments pie) and partnering with Starbucks, I could see them emerging as a front runner, as businesses neighboring Starbucks may look to jump on the Square bandwagon to utilize some location based promotional marketing advantages.

From the merchant standpoint, the more the merrier. We’ve seen many new service providers pop up since Square and Intuit GoPayment hit the market. (This is one area I think a CUSO could really help the small business market by providing a strong mobile platform for merchant services)

A third area that could get interesting is in the area of pre-staged transactions. Recently, NCR began piloting an app for smart phones that allows you to pre-stage an ATM transaction, walk up to an ATM, scan a QR code on the screen and have your transaction post… without having to use a card. A couple benefits here: 1.) The FI completely eliminates card-skimming fraud. 2.) No additional hardware to purchase by the FI 3.) ATM transaction takes much less time making it more efficient for the member.

Imagine if adopted elsewhere, pre stage food orders at restaurants, purchases at retailers, grocery stores… which to me, makes this aspect of the mobile payments arena. If I minimize the time I spend on the day to day errands, I get to spend more time doing what I want. Making it all efficient for the consumer is what will drive exponential adoption.

So without a doubt… Mobile is the future of payments!”

...going to turn your business upside down, and have you clamoring at ways to figure it out, all the while wishing it was as simple a puzzle as the interchange issue. This isn’t going to be easy.

I agree that in the farflung future P2P will dominate the landscape and the world of financial institutions will look very different, but I think it much more likely that over the next 10 years the amount of money big banks can funnel into mobile wallets and especially advertising a mobile wallet that behaves like they want it to.  I understand that P2P and mobiles wallets aren’t mutually exclusive but I think it akin to facebook vs myspace.  First to the mainstream comes the clunky poorly formatted BofA wallets full of pop up adverts and the Jitterbug’s big buttons, then comes the sleeker more functional product that people will wonder how they actually make money.  Sadly they probably won’t come from credit unions.

The future of payments is…paperless and instantaneous. You’ll be able to view an electronic receipt through online banking and there will be no lag in the payment process. You’ll be able to manage your money to the penny in real time.

The future of mobile payment is here, companies like “nearfield” are widely used in places like Japan. Right now it is in use at some retailers on the east coast and west coast. I don’t know of any hot spots for this particular type of payment use in the midwest, though.

The future of payments is the convergence of marketing and payment to a seamless transaction.  The mobile phone is the best way to do this because of it’s high adoption rate and the data it contains.  Currently, Apple and Android stores allow you to purchase an apps, movies, or music by pressing one button.  I think the future of payments is an application that delivers ads to you based on your location (and other factors) and allows you to make and finalize the purchase decision right away.

Think of getting an ad on your phone that says “Hey, you’re near a Starbucks and it’s a hot day, would you like an iced coffee for $1 off?”  If you answer yes, the app submits the order to the location and completes the payment for you, then you just have to pick up your drink (the app could give you GPS directions to the store).  The key is that there is only one button (maybe a 2nd one to verify) for the consumer to press in order to make the purchase decision.  The fewer steps the consumer has to take, the more likely they are to make the purchase.

The future of payments is…

Using data to influence the zero moment of truth for consumers. 

The mobile phone is only a vehicle to make that happen.  Google doesn’t want to make a mobile payments app.  Google wants to capture and analyze your spending patterns with the hopes of one day influencing them.

The future of payments is the mobile phone. New disruptive players will continue to chew away at MasterCard and Visa until MasterCard and Visa buy them or take a stake in them. Look no further than Square with its elegant design, super simple user interface and killer value proposition to see a glimpse of what’s to come.

As far as the payments business goes, traditional banks and credit unions will simply be the back-office account number you enter into your app once and then forget about.

The real disruption will come when payments are built right into the mobile phone OS. Apple Passbook and Google Wallet are the beginnings of this shift. This will further marginalize small banks and credit unions which are already far removed from the actual business of payments.

(From @BayAreaFCU):
“The future of payments is in your pocket…via your mobile device #P2Procks!!!”

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