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Blood in the Water - The Payments Feeding Frenzy

The world of payments has, of late, become like a sharks feeding frenzy. Blood in the water... well money.

There are new announcements being made daily. New partnerships. New programme launches. New approaches and technological innovations. New cool apps and payment devices. So many “disruptive” propositions.

It’s wonderful and yet it is also confusing. Even for someone focused on payments for a living, it’s hard enough to keep up. Yet think about the poor consumer and even poorer merchant. Never mind trying to regulate all of this.

I see the list of payment methods growing and growing at an alarming pace. It used to be just paper cheques, but since the introduction of electronic money – the whole world has changed.

Trying to support all of these methods takes so much time, effort and money. Yet margins are constantly being squeezed in an increasingly competitive space. The only way merchants can realistically make money is through massive volume.

I can’t help thinking that something has got to give.

At some point we need to go from divergence to convergence.

We must surely be coming close to the point where merchants will say “enough already – I’m not supporting another one”.

Before the card schemes would have regulated and tried to standardise all of this – as they did with EMV. Now, they too are being challenged and it looks like all they can do is to try to get a piece of the action.

So if the card schemes won’t regulate and standardise – who will? The governments? They seem to have enough on their hands dealing with their respective economies.

Yet it does need some control as it is getting out of control. Who will step forward? Perhaps the merchants themselves need to group together and impose some control over this.

Until then, spare a thought for the poor consumer and poor merchant whilst the sharks circle around them in these red waters.

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Comments: (2)

Paul Love
Paul Love - Konsentus - Nottingham 25 March, 2013, 12:17Be the first to give this comment the thumbs up 0 likes

Eric,

You have almost answered your own question - the poor consumer will regulate the number of options they actively use.

The only concern is with their purchase and choosing their good/services, and the payment method is not paramount (unless they are using finance).

They will choose the easiest payment method available, and as the statistics still show this is most often the the one that worked for them last time, either a simple card payment, or failing that cash.

It is the challenge of the industry to make the consumer feel comfortable with and trust the new payment methods, so they will choose to use them.

 

 

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 26 March, 2013, 12:50Be the first to give this comment the thumbs up 0 likes

No one can force the merchant or the consumer to adopt a new method of payment, especially when they together don't want to! Comfort and trust are merely table stakes for a new MOP, which will find mainstream adoption only if enough merchants / consumers receive a compelling reason to make the switch to it. On that count, the outlook for the new horde of PSPs for physical payments is bleak. There "ain't nothing broken" with cash and cards at the POS - at least nothing that can be fixed by the new MOPs - so I'd reserve my sympathy for the new PSPs, not merchants or consumers.

When it comes to remote payments - online or mobile - the situation is somewhat different. Factors like 2FA-caused friction are definite pain areas for merchants and consumers. PSPs that alleviate these pain points can find favor with consumers and eventually achieve mainstream adoption for their new MOPs.