Mobile payment will change the payments landscape

Thursday 23 August 2012 | 14:35 CET | Background

Mobile payment will change retail payment over the coming years. Traditional payment companies are trying to redefine their role. Point of sale (POS) equipment vendors and payment service providers face the risk of losing their role in the value chain, just like mobile operators.

M-payment is (finally) gathering momentum rapidly. The number of NFC capable smartphones is set to explode, as is the number of services.  Putting the data in the phone opens up a plethora of options, not just for payment, but for value-added services as well.

This puts the pressure on for the traditional payment service providers. VeriFone claims to sell point-of-sale equipment to 70 percent of the top 200 US retail chains. 

“Most retailers have concluded that the most efficient way to reimagine the retail experience is by leveraging their existing technology investment”,  VeriFone says in two defensive sounding white papers.

VeriFone has agreements in place with all the major new players, including Google Wallet, Isis and PayPal. But that means that all the majors can use the VeriFone ‘rails’ to get to the shops – and it’s not the only means of getting there.

Other devices will come up, not just readers that rely solely on a USB port and a connection to the web, but mobile adaptations as well.

French-head-quartered payment terminals group Ingenico has launched the iSMP card reader in November 2011. The EMV chip + PIN terminal connects to an iPhone 4/4S or iPod Touch. That being said, it features two processors running a dedicated OS, its own flash memory, a screen, a keypad, and comes with its own battery. It is thicker than the iPhone it’s latched onto. This might not turn out to be the end game in POS equipment. It does come with iOS apps, though.

Ingenico is also bolstering its service capabilities. It has taken a controlling share in Roam Data, an American m-payments provider supplying to Intuit, Sage and First Data, amongst others. Roam also offers a swiper, akin to Square, PayPal Here and VeriFone Sail. The card industry on the other hand, is about to abandon he mag stripe globally.

Likewise VeriFone faces a somewhat uncertain future for its Sail mag stripe reader and GlobalBay Payment-as-a-Service (both brought in by recent acquisitions). They must gain footing in a market filled with big names. But VeriFone probably cannot match the pace at which smartphone s develop.

While it is true that retailers will face multiple apps, it is by no means set in stone that the provider aggregating those services will be the POS vendor. It could be Google or Isis or one of the other wallet keepers. Or it could be PayPal or Square, or one of the other cloud based payment service providers, as opposed to dedicated payment networks.

Not wishing to be outdone, the large merchants have banded together in MCX, the Mobile Payments Exchange. Or it might be the smartphone OEM. Vendors could build their business using iOS apps and Apple hardware. Until the day that Apple launches a competing service. One should not bet against Apple being the big kahuna in the iOS tribe.

In a few years, NFC readers will also have become low-margin commodious hardware. It’s the services - the couponing, the customer loyalty, the inventory management - that add value.

To the customer, the POS manufacturer does not register on the radar. To the merchant it does. Retailers could regard the 100+ pound machine weighing down the counter as a thing of the past. Perhaps recognizing that, IBM, the global number one vendor of cash registers has sold said Retail Store Solutions (RSS) activities to Toshiba, in a series of moves out of traditional and low-margin hardware product segments.


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