Mobile, Social Media and Real-Time Payments: Keeping track of payment trends at Money20/20

To accompany our daily roundup of all the comings and goings of Money2020 Europe, we will also be exploring in more detail some of the Track Sessions from the event!

On Monday, we attended a session that explored the current hot trends in the payments industry.

These were identified in a study conducted by Edgar, Dunn and Company, a payments consultancy firm. Entitled Advanced Payment Report, the session discussed the top trends that are likely to dominate the industry in the near future. Here, we take a deeper look at some of them.

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1. Mobile Wallets

Mobile wallets got the ball rolling as the first trend. Edgar, Dunn and Company’s Samee Zafar pointed out that the wallets are still in their infancy despite the significant investments made. Interestingly, he said that the plethora of wallets currently available will coexist for now, but the “market will consolidate in the near term”. He pointed out how the game has changed from mobile operators to handset manufactures like Apple and Samsung.

Staying on this point, for some, this market consolidation is necessary for the sake of the consumer. On Monday morning we spoke to Mark Ranta and Lu Zurawksi of ACI Worldwide, and in our conversation Mark highlighted the problems for consumers when it comes to using not only mobile wallets, but also payments in general. “Do I dip [the EMV card]. Do I slide? Do I even try Apple Pay?”

In a recent guest post, Bobbi Leach, the CEO of FuturePay, put some figures on the cost of this confusion. “To put it into context, in 2015, mobile payments in the U.S. accounted for $8.71 billion, which is a small piece of the overall $450 billion retail market.”

Despite this current apathy towards mobile wallets, the general consensus is positive, as Mark Ranta put it, “There is clear potential.” One should also bear in mind the incredible opportunity mobile offers in terms of data. As Carta’s director of Business Development, Salim Dhanani, recently said: “In the world of payment data, mobile is the game-changer.” He went on to say how there is “no doubt” mobile payments will revolutionise how data is collected.

 

2. Social Media

Now this is a very exciting trend. The fusion of the social and the financial is something that has been slowly bubbling with the likes of Snapchat’s money transfer service, Snapcash, sending money over Facebook Messenger and even Blackberry integrating Barclays’ payment service, Pingit, into its social messaging service, BBM. But, as Zafar points out, social media is talked about as the future of commerce, but “it hasn’t fully materialised yet”.

According to the research, over half (51%) of people surveyed by Edgar, Dunn and Company believe that social media will capture a larger share of online commerce. However, it’s not going to be smooth sailing as a staggering 92% of respondents believe that fraud will remain the top concern for online commerce.

But that is rather seen as a hurdle to be overcome rather than a monolith to avoid. As Christopher Kampshoff, the CEO and founder of Lendstar, told PaymentEye recently, the union of payments and social is inevitable.

“Payments happen where people are and where they interact. As social media is exactly doing this, bringing people together and make it easy for them to interact, it is therefore clear that payment and social interaction belong together.”

This is echoed by Massimiliano Alvisini, the regional vice president Northern Europe & Iberia at Western Union who wrote: “With over half of the world’s population using mobile phones and social networks, it was only a matter of time before the two would converge to offer a payment solution to the mass market.”

 

3. Real-Time Payments

We covered the idea of real-time payments in great depth in our Payments {R}evolution Magazine where we identified that the key force pushing adoption of this infrastructure is “customer expectation of a better, faster service that can handle mobile, online and data reporting in a modern electronic world”.

In the session, Samee presented a potential future where “you just pay the merchant with your bank account”. This future was given credence recently when US Bank and Bank of America started to allow their customers to move money in real-time using their phones. The payments move over the clearXchange network initially formed by a number of US banks including US Bank and Bank of America alongside Capital One, Wells Fargo, Chase back in 2011 to process P2P payments from email or mobile numbers.

Back across the pond, the concept of real-time payments became more appealing when in November, the UK Faster Payments Scheme Limited (FPSL) increased the limit on its real-time payments service from £100k to £250k. At the time, it was revealed that a further review of the scheme was planned for this year.

In an interview with NACHA president and CEO Janet Estep at the Las Vegas Money20/20, she said: “The challenge is getting everybody do it in the same way. It’s also about the attached systems. The payment might move across, but if you can’t post it to the end account that’s a problem. I’ve had businesses says to me ‘it’s great if I can receive an ACH the same day but if you don’t send the data that helps me post it to my internal account I can’t do anything with it’. For now having payments plus information is part of the challenge.”

 

4. Blockchain

Blockchain is an oddball. Samee said the report found the technology to “not all hype” and that it has “real world applications in financial future”. That’s why you see companies like Hitachi setting up innovation labs to explore the promise of Blockchain and how companies like Blockstream can secure $55m funding rounds, all fuelled by established giants such as IBM saying the tech is “inherently more secure than traditional systems”.

However, despite saying that it’s not all hype…that’s what it appears to be for now. A recent PwC report found that whilst over half of FS companies surveyed (56%) said they understand the importance of Blockchain tech, just over the same amount (57%) actually said that they either didn’t know how best to respond to it, or were unlikely to do so.

This could explain the at times erratic approach to Blockchain. On the one hand people are beginning to argue more and more vociferously that the technology is not mere hype, or as Nick Williamson, CEO and founder of Credits, said “it’s not just trying to piggy-back on a jumped-up trend”, but at the same time, the lack of education or awareness of the specifics of the technology makes it look like all talk and few use-cases.

 


You might also be interested in…

> Our coverage of the beginning of Money20/20 Copenhagen.

> Our coverage of Day 2 of Money20/20 Copenhagen.

> Our exclusive interview with Wirecard’s SVP Christian von Hammel-Bonten about what the next great payments frontier is likely to be.

Missed our special edition PAYMENTS {R}EVOLUTION magazine at Money20/20? Download the FREE digital version of it by clicking on any of the articles below!

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