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The Battle to Change Payment

Mobile Commerce Insider Featured Article

November 03, 2014

The Battle to Change Payment


As much of the recent tech news coverage has demonstrated, the mobile payment arena is expected to see significant growth. While there have been many mobile payment developments over the last five to 10 years, Apple’s (News - Alert) recent entrance into the industry space could signal a deluge of new developments in the years to come. Consequently, businesses that are willing and able to embrace this shifting landscape could see some huge benefits to their bottom lines.

While enterprises use certain financial instruments to move money from one place to another, interpersonal payment within the consumer space could change rapidly over the next year. Whether the transformation is at gas stations, restaurants, coffee shops, the mall, etc., when it comes to those new payment platforms, there are a few emerging players in the quickly changing market.

According to the Federal Reserve Payment Study, roughly two-thirds of consumer and business payments were made with payment cards in 2013. From 2003 to 2012, U.S.-based payment card share grew from 43 percent to 67 percent of all non-cash transactions. Over the last three years, credit and debit card usage has grown over 7.5 percent each year. This growth has resulted in 122.8 billion payment card transactions in 2012, good for $79 trillion in value.

Because of this growth, myriad technology companies want to gain traction in the space. A natural development has been the spread of smartphone hardware (and supporting software) that allows merchants, small businesses and individuals to accept card payments on their smartphones or tablets. Companies like Square and PayPal (News - Alert) sell portable card readers that interface with a smartphone to allow anyone to accept card payments.

The focus on payment has also extended beyond new pieces of hardware. Companies like Venmo, Google (News - Alert) and PayPal have created applications that enable smartphone owners to transfer money seamlessly between each other. These types of transactions can involve direct bank-to-bank transfers, as well as card payments, but the apps are a way to remove both personal checks and physical card swipes from their daily lives.

While these companies focus on peripheral hardware or apps, there are some companies that want to reinvent the payment card itself. Coin was the first player to gain some traction in this regard, developing a “smart card” that can store up to eight credit, debit, gift cards, etc., on one physical payment card. Consumers “upload” their cards onto Coin using a mobile app and card swiper. When it comes time to pay for something, users can select between stored cards by simply pressing a button.

Plastc, a direct competitor to Coin, has pushed that idea even further. It has integrated an e-ink touchscreen display into its smart card. This allows users to “lock” their smart card via a PIN, swipe between stored cards, display pictures of both your face and signature upon payment, and notify your phone through a mobile app if you forgot your Plastc somewhere. The best part about these solutions is that they’re the same physical size as a credit card and will work wherever payment cards are accepted.

Some of the tech industry’s heavyweights want to remove the need for cards altogether. In September, Apple announced their approach with the unveiling of Apple Pay. By utilizing Near Field Communication (NFC), Apple will empower consumers to pay by tapping their iPhones to NFC-enabled terminals. Google came out with a similar product in 2011, Google Wallet, that hasn’t really caught on yet. But, with Apple’s vertically integrated hardware/software capabilities, wagers are high that Apple Pay will succeed where Wallet has not.

As the raw numbers indicate, non-cash payments are a massive business and many industry-leading tech companies want a piece of the action. For enterprises, this can make for some game-changing developments. As a business, you need to make sure your customers’ route of paying is as easy as possible. That doesn’t mean manipulate or dupe your customers – it simply means you need to make the buying process as efficient as possible, no matter what you’re selling.

Some companies like Wal-Mart and Best Buy (News - Alert) have opted out of Apple Pay in favor of their own payment solution – they will likely regret that decision. Apple carries so much weight when it comes to early adoption, and historically, few technologies Apple produces fail to catch on.

Consumers want a streamlined and easy payment experience, not 10 different apps they have to sort through to pay at different stores. If you have a consumer-facing business model, look into the benefits of the new technology as a way to simplify the payment process, both for in-person transactions as well as incorporating Apple Pay into your mobile apps. Fusing this business model could make that process easier and more enjoyable for your customers.

With Apple making such a high profile push into the payment sector, there’s a possible halo effect for related technologies. If Apple Pay is the technology that gets NFC off the ground, Google Wallet and other mobile payment systems could also gain considerable traction.

Whether or not you end up integrating Apple Pay into your payment ecosystem, it makes sense to consider incorporating NFC payment or altering your mobile apps to interface with the biggest mobile payment players as those players start to build up steam. With the weight of Apple behind the new technology, consumer adoption is almost sure to follow, and the key to staying relevant is to always be where the consumer is.

Jeff Francis is the co-founder and COO of Dallas-based Copper Mobile, a leading enterprise-centric mobile development firm that helps companies solve their business challenges with cutting-edge mobile solutions. He has over 10 years of experience in early stage company start-ups and working with Fortune 500 in the software/technology industry. Jeff has five years of experience in the Software-as-a-Service (SaaS (News - Alert)) industry and was the major accounts executive in an organization that went from almost no market presence to industry dominance in less than five years. Prior to co-founding Copper Mobile, he was also the president and CEO of Alliant Medical in Dallas, which averaged a 112 percent growth rate over the first three years of operations. Jeff earned a Bachelor’s degree from the University of North Texas in Entrepreneurship and Strategic Management.

Edited by Stefania Viscusi

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