By Simon Fairbairn
While the payment experience is still a necessity, over the years the payments industry has made steps to improve the experience for both consumers and retailers. The birth of the credit card came about as a way to avoid carrying cash while providing access to short term credit. The debit card was similarly introduced as a better means of payment than a physical check. Over time, both have evolved to provide a simpler, faster customer experience. However, it is important to note that like many innovations, their introduction was driven purely to solve a problem: is there a better way to make a payment than conventional cash or check?
For many years, the payments industry has led the way, growing the scope of provision and the quality of experience. Today, we live in a world where cards are ubiquitous, cash is in decline and checks as a means of payment have all but died. However, as the world becomes increasingly digital, new opportunities are being uncovered.
Creeping up on the inside track has been the faster payment – a near real-time, direct account-to-account method of transferring money that rivals any card scheme for speed and simplicity. It doesn't yet provide a route that can be used effectively at the POS, but that could become an option. This raises the question of whether in a world of convergence where technologies start to overlap, could faster payments be facilitated at the counter?
Granted, technical and logistical hurdles must be overcome. But surely the point of innovation is to find new ways to solve problems. What's more important is to consider what might drive such a development and who would be the winners in such a case, as this tends to determine if an idea or opportunity can truly go the distance.
From the consumer perspective, it's just another convenient payment option akin to that provided by a debit card: make a payment, money leaves your account, transaction history is recorded, job done!
From the merchant perspective, however, providing card payment services is costly. Transaction charges, the underlying interchange fees, the risks associated with fraudulent activity and the risk of chargebacks are all obvious motivations when it comes to securing a simpler, cheaper way to accept payments.
With over 300,000 retailers in the UK, alone, an alternative that could mitigate some of the expense of existing payment mechanisms would be quite a force for change. It may not be so positive for the acquirers and card schemes, but like all innovations, there are many routes to consider and given their control over this key point of trust, there may be a new role for them in facilitating such a service.
Many miles still need to be traveled before such a solution can be realized. But in a digital world where the boundaries of what is possible continue to grow, could the convergence of mainstream banking become a reality at the POS?
Simon Fairbairn is head of professional services / Ingenico Group EMEA. Take a look around the new Payments Landscape in this Ingenico white paper with a special focus on the impacts to consumer behavior. www.ingenico.com/payment-landscape-new-normal.
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