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Will Payments Clearing Be Disrupted?
What happens when a payment network becomes an icon on your smart phone screen? Brand identity shifts, says David Schropfer, Luciano Group head of mobile commerce said. That is one element of possible disruptions within the mobile commerce ecosystem.
Where today some consumers will look for a “Visa accepted here” or “MasterCard accepted here” sticker on a retail shop, they might someday look for a “PayPal accepted here” sticker. And that would show the evolution or disruption of the market, where existing suppliers find themselves challenged by new rivals.
But that isn’t the only form of potential disruption. As Square arguably partly competes with other point of sale terminal suppliers, and partly competes with other branded clearing networks, so Isis might compete with other marketing services firms.
How can Isis make money? By offering marketing services sold to retialers, not transaction fees, said Schropfer. “They can charge retailers something for providing value. “The loyalty industry gets paid about $8 to $24 per customer to get a consumer enrolled and using a particular program, says Schropfer. So maybe Isis gets paid $5 per customer, per year, to provide loyalty program services.
There are other reasons to consider that part of the business, as well. Of the $13 biliion in money that travels around the globe every year, perhaps $160 billion in transaction fees is earned.
By way of comparison, advertising represents about $240 billion in revenue. Marketing and offers is a business generating about $500 billion a year.
But even if Isis and Google, for example, do not want to compete with the payment networks, others do have such aspirations, or might, at some point. The credit and debit card business is all about moving money from one account to another.
The issue is how that happens, and who gets paid to provider the clearinghouse services.
Visa or MasterCard (the scheme) is how we do that, now, Schropfer says. The card presented at retail is a promise to pay, and the card reader and network has to figure out who is supposed to be paid.
That doesn’t mean the Visa or MasterCard networks are doomed. They “probably does not go away in our lifetime,” says Schropfer. But the importance of the brands involved in such transactions could change.
Payment becomes less about the “scheme” brand (Visa, MasterCard, Discover, American Express), and more about other brands.
But there are other initiatives under way as well. The Merchant Customer Exchange, sponsored by Walmart, Target, Best Buy, Lowe’s, CVS, Shell and Sears, among others, is a retailer attempt to control mobile payments.
2012-10-29 01:22:05
Source: http://dailynewsreader.mobi/2012/10/28/will-payments-clearing-be-disrupted/
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