World moves at different speeds on payment innovation
FinTech There has been a rush of disrupting technologies in the payments industry with mobile leading the way. Renee Frappier argues that more uniformity is needed globally in order to propel this industry forward.
The size of the payment disruption market will continue to be squeezed as innovations adopted in one region of the globe are embraced elsewhere.
Yet this is proving to be a slow process with the global acceptance of new technologies not happening as quickly as the industry would like.
Germany and the Netherlands led the way when it came to merchants promoting ecommerce payment systems, while retailers in the USA and the UK tended to rely initially on legacy technologies. Many merchants still prefer to simply transfer bricks and mortar payment methods online, which limits the agility of their businesses and payment systems.
Consumers are changing the way they shop, but are only slowly altering the way they pay.
They will only be encouraged to try different payment methods if merchants globally realise they do not need to limit themselves in how they take payments from businesses and the public.
The lack of unification among payment platforms driven by different international banking and retailing cultures is one of the biggest challenges faced in payments processing.
The global industry is too fragmented. Europe has SEPA (Single Euro Payments Area) but a more international system that helps cross-border payments would be welcome. This would also help to drive innovation.
There remain difficulties in the US where there are hundreds of small banks and merchants who are locked into old payment concepts. Mom and pop banks have always reacted slowly to innovation. It has taken a long time for chip and pin technology to be adopted in the US, for instance, because many banks and customers still think it is less secure than signing your name.
Of course, the industry cannot ignore concerns around cybercrime and cyber security. As things move to cloud technology the sector must be seen to be reacting to existing and new threats.
Mobile will continue to lead disruptive payment innovation although this trend is being pushed by the companies that have a vested interest, such as Google.
These players have their own agenda to grow the market which means many merchants are being pushed towards mobile faster than they would really like. Although everyone accepts that the technology makes things more convenient for consumers.
In North America businesses are certainly seeing a significant rise in the number of sales taken via mobile devices but in many cases the payments themselves are not actually mobile. Merchants are simply accepting the same form of payments they would from a desktop PC customer, rather than from mobile payment wallets, for example.
There is no doubt mobile payment technology is a fiercely competitive market and PacNet has a number of clients in the wallet space. Many large brands have launched wallets, including established credit card companies and players like Apple, whose product is based on QR technology; and Google, which is offering its wallet for free.
We will see more consumers using wallets as an alternative to a bank, while this is also an opportunity for the financial industry to engage with many of the world’s population that do not use banks at all, in places such as Africa, Asia and the Middle East.
The traditional banking industry needs to embrace mobile technology and not see it as a threat. In the same way they have offered customers an opportunity to manage their accounts online, more banks around the world need to look at mobile apps as the next logical step in customer service.
The business to business market also needs to move quicker on mobile payments. I am still writing out credit card details on faxes for business orders despite the technology available. This is one area where innovators should be looking to disrupt.
Also, with various payment products being used in different countries it is important companies consider which ones their customers are using in the territories they are targeting so they maximise sales. It might not be the same system the merchant uses in its own country.
More global standardisation and higher consumer adoption will fuel the payment market’s expansion. The innovators that can develop products that not only disrupt but also have worldwide appeal will be the winners.