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It's sunny day and Simon steps in to local grocery store wearing his Google classes. He is thirsty. Grabbing a can of soda he walks to check out desk.
"Google Class - payment" says Simon and his classes bring him menu screen where are Cards and Checkout as option. Same time Google class GPS system locates him to Jim's Grocery store next to check out registration. Simon says "Cards" and Google cloud system
selects his preferred card info and sends payment data to cash register as long as Jim behind the counter has pushed payment data and selected card as payment option for Simon. Simon punches his card PIN code and payment is done. Simon has his card safely
in his wallet next to kitchen table back home.
Is this near or far away future scenario? If we only prefer to stick with mobile phones as alternative mobile payment device option, we miss the big picture.
Just imagine if Google adds Wallet option to Google classes, how much easier it would be to use mobile payments. Or have we ever thought what happens if Apple bring iPayment app to their new soon to be launced iWatch. Payment data is already stored to iTunes
and there is no need for card present option as long as payment is done with iPayment app using iTunes credits. Or if iPayments is introduced as alternative payment solution on webstores. We already purchache 0,99 € goods with card. Of course commission we
pay to iTunes has to be less than 30 %.
Or what if Apple or Google one day bring really easy to use mobile payment apps and same time launch a bank with already billion of end user data, would I be worried, if I would be in the shoes of the traditional bank.
There is nothing wrong with current payment tools (cash or card). Most of the mobile payment solutions are too hard to use and most of the cases it does not solve a problem for merchant. If merchant has to upgrade his sale of point, it can not cost anything.
If any new payment solution will succeed, it has to be faster than current systems, reliable and widely used. Nobody is ready to invest anything if it isn't accpted anywhere. Think about American Express card acceptance. If commission is twice the price than
average card, not too many merchant is happy to accept that as preferred payment method unless you run high end store.
All the billions of end user data that is held on file by Apple and Google pertain to cards issued by banks. If I were a bank, why should I be bothered whether my customer uses plastic or mobile app to pay for a purchase? Either way, I'd earn interchange
on the transaction. I might actually prefer the mobile wallet option since I can get to levy the higher CNP interchange rate even for a CP transaction.
Given that markets value tech higher than the banking sector - barring a few exceptions - I don't see how Apple / Google will justify a move to enter banking to their shareholders at the risk of diluting their valuation. But, suppose they do and launch a
bank. Let's not forget that the billions of cards they have on file are not their own cards. Even by becoming banks, they won't earn any interchange on purchases made with those cards. To overcome this, let's assume that both companies go on a drive to issue
their own cards to the billion members of iTunes / Play Stores. Now, let's remember that they're no longer cool tech companies but "yet another bank" that's trying to pitch its card to me. While I'm not sure how long it would take them to acquire billion card
customers, I'm very sure that banks would be able to launch a cool mobile phone / tablet / some-other-device in the same time and threaten to take away the tech market from these two companies. If the last statement sounds ridiculous, it's no less or more
so than the proposition that tech companies will launch banks.
In a nutshell, if I were a bank, I'd have no reason to be worried if Apple or Google got into mobile wallets, with or without their own banks.
Data comes with privacy, opt-in / opt-out and many other caveats and, as of now, its monetizability is far from proven. Even if Apple / Google found a way of making money from data, why should that threaten banks? It's not as though they were making money
on data before and are going to lose that revenue stream to Apple / Google in future. As long as banks earn interchange - which is something that Apple / Google can't take away from them unless they enter banking themselves - banks should be happy. I'll have
the last laugh when Mobile RDC - something that banks introduced - is recognized as the coolest thing going in mobile financial services :)
I see more and more signs why Google and Apple are moving into financial sector. They may not yet want to be a bank in a traditional way but as trusted PSP/ small credit institute with their own payment systems.
Google has Mobile Wallet and Checkout, if Google Glass will be introduced, why not add payment to device which is always on the move. See similar idea with Mobile Wallet.
Same goes with Apple and iTunes. If they currently earn 30 % commision on purchase from iTunes store, why not add iTunes app for iWatch where credit card company/ bank get transaction fee as today and Apple gets service fee of 2 % from each goodies bought with
iTunes payment app.
Both companies already have more data on consumers than any bank even can dream of. They are globally present and have already kind of back bone system for cash management. When new banking rules will finally step in, small consumer loans will be offered by
totally new instances.
19 Mar 2009
This post is from a series of posts in the group:
Payments systems visions, strategies, trends, pilots, forecasting, and planning for the short-, medium-, and far-term.