What the Global Marketplace Can Teach U.S. Entrepreneurs About the Future of Payments
The world is already using payment tech that will disrupt American businesses next.
Payments is a constantly evolving ecosystem that small businesses and entrepreneurs may not feel they have the resources to stay current on. But it is critical to overall economic growth to stay ahead of new next generation technology offerings. This is important because disruption is hard to predict.
It’s useful to look at global examples of innovation to get a sense of possibilities. New technology and market practices from Europe to Asia may help merchants here at home stay ahead of the curve and remain competitive.
Here are the top four technology-driven shifts.
1. Contactless cards
Contactless technology is well developed in Europe and Asia, but there’s very little usage in the U.S. (yet). In London, for example, most consumers taking the Tube, a bus, or a train pay the fare by waving a secure chip card instead of swiping a card or removing cash from their wallet.
Likewise, the same functionality is available via smartphones with digital wallets including Apple, Android and Samsung Pay. Contactless cards are typically used for smaller amounts: the average in March 2017 was just over nine British pounds or about $11 and are widely used among merchants.
2. QR readers
Alipay in China has pioneered wide adoption of another smartphone approach using a scanning app to read a QR code, then transferring funds from the consumer’s digitized account to the merchant.
Alipay is a division of the online retail giant Alibaba. Their smartphone app can be used for a wide range of everyday transactions, from covering restaurant tabs to money transfers to paying for utilities or plane tickets. The QR code strategy is also used by Visa globally with the recent expansion of their mVisa QR-based payment service from India, Kenya and Rwanda to merchants and consumers in Egypt, Ghana, Indonesia, Kazakhstan, Nigeria, Pakistan and Vietnam.
3. Software integration
Think of how many tech products are collecting dust on your own shelves at home because they became obsolete. Merchants face an equally fast-evolving technology landscape.
Software integration of payment systems can be used to make systems both more future-forward as well as more seamless. For example, in our Ezidebit business in Australia and New Zealand, we develop and operate technology-enabled, software-driven product offerings. These solutions are marketed through a network of integrated software vendors and direct channels to numerous verticals. Merchants can integrate payment solutions into their existing systems rather than be saddled with multiple, parallel ways to handle debit cards, ecommerce and other payment streams.
4. Cashless society
We’ve seen India de-monetize, and one of the outcomes has been the tremendous growth of startup Paytm. In a short time, the mobile commerce platform has grown into India’s largest of its kind as a cashless alternative. Paytm, which started by offering mobile recharge and utility bill payments, now has over 100 million registered users and manages more than 60 million transactions per month.
These global examples are useful studies for the U.S. market and were part of the conversation when banking, retail and fintech companies met with startups and venture capitalists at a recent Atlanta conference hosted by the industry’s Electronic Transactions Association. Atlanta is a global hub for fintech companies and a gateway for global business.
Wherever we look, we see a continued trend toward seamless integration of payment and technology in everyday lives, with devices most of us already have in our pockets. U.S. smartphone penetration has nearly doubled in the past five years, topping 80 percent last year. Innovation in technology presents a world of opportunities.
Jeffrey S. Sloan is the 2017 Chairman and President of the Electronic Transactions Association. He is the Chief Executive Officer and a member of the Board of Directors of Global Payments Inc. (NYSE:GPN), one of the largest worldwide providers of payment technology solutions, and has nearly 25 years of experience in financial services and technology.