The National Retail Federation's Big Show 2013 should serve as a wake-up call to banks, credit card companies, and other financial service providers. A payment technology showdown is brewing.
A number of competing ways to pay for goods and services were announced during the NRF Big Show 2013, held January 13 through 16 in New York City. While some of these solutions will work hand-in-glove with established payment-processing options, others are looking to shake up the status quo.
Frankly, it's too soon to tell what this will mean for CIOs and other leaders working in finance and retail IT. At this stage, the best you can do is gather information and keep abreast of the latest trends. That way, when your CEO, CMO, or CFO comes strolling in asking questions you can be armed with knowledge of the latest developments.
That's the hard work that will await you, once the market settles down and some standards emerge.
Meanwhile, here's a rundown of some of the payment technology news out of the NRF Big Show:
You can now use your PayPal account to pay for in-store purchases at 18,000 US locations operated by 23 retailers, including Abercrombie & Fitch, jcpenney, Office Depot, and Toys "R" Us. The company has also struck a deal with point-of-sale technology company NCR to create integrated in-store payment and service solutions for mobile devices.
Paris-based payment solutions provider Ingencio is partnering with Microsoft to develop payment devices based on the new Windows Embedded 8 handheld platform. According to statement released by Ingencio on January 14, the partnership will result in devices that enable "fully integrated acceptance of current and future forms of payment, including magnetic stripe, EMV chip-based cards, contactless, and NFC-enabled transactions." Ingencio has more than 20 million payment terminals installed at retail locations in 125 countries.
Visa, meanwhile, approved BlackBerry-maker Research In Motion's mobile payment solution, which will open the door fo wireless carriers to advance their own mobile wallet efforts. In a prepared statement released January 16, RIM says its Secure Element Manager solution for Near Field Communications (NFC) mobile payments is designed to securely manage credentials on subscriber identity module (SIM) cards installed in all types of NFC-capable mobile devices. EnStream, a joint venture of telecommunications companies Bell, Rogers and TELUS, uses RIM’s SEM solution for mobile payments in Canada.
Mobile payments reel in the big bucks
Mobile device integration is the key underpinning in all of the above solutions. Considerable investments are being made in developing mobile payments, and research groups are making bold predictions about where this is all headed. The wildcard in all of this is, of course, the consumer: What options will be most attractive and stand the best chance of long-term survival?
While shakeout is inevitable, as a whole the mobile payments market is definitely heating up. In the US, Forrester Research predicts that mobile payments will reach $90 billion in 2017, representing a compound annual growth rate of 48 percent from the $12 billion spent in 2012.
Yankee Group forecasts that what it calls "the mobile money marketplace" will account for $1 trillion in revenue by 2015. The mobile money marketplace encompasses mobile banking, payments and coupons, loyalty programs and connected retail devices, according to Yankee Group.
The reality is that changing consumer behavior isn’t easy, and merchants have many competing investment priorities. Mobile payment and digital wallet providers face significant hurdles to achieving adoption at scale, and 2013 will be a pivotal year in that quest.
Another analyst firm, VDC Research, is also predicting a slow uptake for mobile payments, particularly NFC-based solutions. According to a statement released by VDC on January 15, "The complexity of the ecosystem that must take shape for NFC to become the payment processing standard of the future is just too great, and without a strong leader or catalyst with NFC continuing to move forward in fits and starts."
Stay tuned. We'll keep a close eye on these developments in the months ahead.
@Soozyg: I can relate to your concerns. I happen to agree, though I wonder what the "digital native" generation will expect as they begin accumulating disposable income. they may have very different expectations. Only time will tell.
@Susan, I actually like getting paid by clients thru PayPal. And then I have used my PayPal account for online retail. But I definitely prefer using my credit card. Partly because I get travel miles and other discounts thru my credit card.
While I understand the desire for advancements in payment technology...and I know that PayPal has earned an excellent reputation for security...as I've mentioned in other E2 chats, I'm not sure faster or easier techology in this area is better. In fact, it makes me quite queezy. I don't think I would ever use it.
@Curt, @Singlemud: Yes, to he best of my knowledge these options can work offline as well though I'd need to reserach more on the PayPal solution to be sure. According to PayPal the option is available in retail stores in the US right now. I don't use PayPal personally, so I have not seen this in action. Would love to hear from others if anyone has had experience yet using PayPal in a retail environment.
@singlemud, I know that Square has a mechanism for dealing with card transactions if the Internet isn't available. I have to believe that PayPal will have something similar. I'm excited about these developments for both consumers and smaller companies -- it's making a huge difference for retailers from stands at farmer's markets up to major chains!
It is great to see PayPal is heading into point of sale market. I hate to carry my wallet. I am looking forward to seeing mobile payment solution. A quick question, does the mobile has to have Internet connection to complete the payment? Is there any real use case?
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