Payments future landscape


These past few months have been rather interesting in terms of the payments industry and the subtle shift in consumer perceptions.  One of the most amusing to me has been the clear lead Paypal has in the e-venture payment space to any other brand, card associations included.  This may not be a good thing in my opinion, but undoubtably it has happened.  Ask any e-venture owner what payment method they will be accepting on their platform or site, and at least 7 out of 10 will tell you Paypal.  Not Visa or Mastercard, but Paypal, regardless the obvious issues around its regulation and the bad risk prevention policies it employs.

This to me indicates a real challenge traditional payment companies may face during the next few years, which is how they can win back the market from ‘upstarts’ such as Paypal, Moneybookers, mobile networks, and the many alternative payment methods in the market today.  With the strength of the Paypal brand on the Internet, and to me this means their brand strength in terms of the Internet savvy generations, as well as the rapidly growing mobile payment services, what will the PCI (payment card industry) founding members (Visa, Mastercard, Amex, Diners and JCB) do to retain their brand strength or for some regain their brand strength?  Seems to me that as one accepts virtual payment instruments and mobile phone based solutions as the way forward, it removes or distances the payment methods used from a card, the base tool used in the credit card growth the past 4 decades.  Once NFP, mobile payments, and the next generation of Paypal type solutions have rolled out, the card brand will be completely hidden, and in my view, forgotten in the not-so-distant future.

Still some way to go before we can say goodbye to the plastic card (magstripe and chip), but it seems to me the subtle shift in market direction may just ring in that future much sooner than many may have thought.  Unlike the media industry’s late wake-up to the power of virtual distribution, the card payment industry may just have enough time to learn the new rules of the payments game, and hopefully apply them wisely to retain their future market share and brand strength.  Some may not be able to transition, as the departure from card may be too big a shift in paradigm for them, but those that do would have their years of payments experience married to new tech solutions that could eat the Paypals of the future for breakfast.

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