05 Sep


The impact of mobile technologies is changing the consumers behaviour throughout the purchase path and the future of payments seems no longer the same. Payment systems have to cope with the new consumer “mega-trends”: people expect to “stay on“, always connected, and to have every services always available.

According to the last StatCounter research, mobile traffic is growing rapidly and will reach 20% of total internet traffic by the end of 2013. The smartphone usage is growing with x-time factors and, according to Forrester 2012, the number of smart devices will reach 67% of traditional mobile in Europe by 2016. In this scenario, it is evident the importance of creating a consistent consumer experience for payment services on the internet, through integrating remote and proximity payments and developing a “one screen” payment experience, regardless of the device used.

So, mobile devices will change the payment landscape radically and will turn e-commerce and m-commerce into just a commerce experience. The distinction between POS and e-commerce as well as cards and payments will disappear. Merchant and consumers expect a full supporting shopping funnel and non-bank providers have already been creating services with payments fully integrated in the sales process.

In 2010, Square launched its plastic phone attachment credit card reader that has definetely changed the Point of Sale landscape. Other non-bank successful cases are PayLeven, mPOWA and iZettle. All this companies have been working on ways to let merchants take credit card payments using mobile devices and now are working on extending the value added services between merchant and consumer. New entrants, like LevelUp, are trying to change the revenue model applying a zero-percent charge for money interchange. In its business model, LevelUp makes money when a small business client uses the “loyalty campaign“ or “customer acquisition campaign“ that LevelUp promotes for them.
Through the years, PayPal has taken the lead in on-line payment “without a bank“ and has put great focus on mobile commerce, exceeding 14 billion dollars transaction value in 2012. Now they are quickly moving towards the mPos and merchant business arena (with Paypal Here), also joining the competition with their loyalty campaign and customer acquisition services.

In this competitive scenario, banks, acquirers and issuers are being gradually disintermediated by new entrants focusing on delivering a more complete user experience. Dedicated customer experiences has been creating in which payments are integrated with mobile services for customer acquisition and sales increasing (via rewards, digital couponing, loyalty campaigns, location based value added services, etc.), leaving the payment experience itself less relevant. Furthermore, business Intelligence and digital engagement through customer data integrated with social media analytics are becoming the next frontier.

What can do banks, then? According to the Fraunhofer Institute last survey “Banks and Future”, cost reduction remain the main challenge for the next years and innovation management is the last one among the top ten strategic initiatives for future banking. The banks are struggling with changes in the regulatory arena and sustaining considerable regulatory compliance costs. There is still room for innovation but partnerships and common infrastructures are required to reduce investments and leverage economy of scale.

The consumer-merchant area seems one of the most promising to focus on. Banks need to accelerate the development of a more engaging “consumer experience”, leaving payments as a just one function smoothly integrated within the overall sales process. “Thinking mobile first” is the key success factor in that changing game, but partnerships with non-bank players seems to be required to leverage non-bank’s technology capabilities and ensure adequate time-to-market.

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