2012 has seen mobile payments moving from a nascent technology to a more common method of payment. I cannot wait until the transaction statistics are published. I believe the dollar value is most likely down from last year. However, it seems safe to predict that volume will be up.
Continuing recent trends, I expect debit transactions and prepaid to grow at a higher rate than in previous years as consumers across all income ranges continue to show fiscal prudence. Of these debit transactions, how many will originate from the mobile phone rather than a plastic card?
The topic of mobile leads me to consider, what actually happened in the payments industry in 2012? Looking back at some of the industry announcements, several things stand out for me:
• The interchange fee settlement and subsequent fallout in the U.S.
• The continuing global growth of prepaid as a payment instrument
• The march toward, and confusion about, mobile technology around the world
• The fast approaching EMV shift in liability dates in the U.S.
• The continued “electronification” of monetary transactions worldwide
Although making predictions is typically left to the analyst community, I thought I would share some of my thoughts for 2013. I think we will see much of the same with a different twist:
• Innovation will continue to be at the forefront; however, scalability and reliability will help validate new ideas and concepts in the minds of skeptical CIOs.
• Due to the influx of consumer-focused start-ups, financial institutions will push to elevate their customers’ banking experience.
• Prepaid transactions will continue to grow in volume across the world. For the low-income demographic, it will become the payment instrument of choice and niche segments (such as university students and travelers).
• U.S. financial institutions will begin to see the business benefits of EMV, particularly the ability to provide highly-targeted products to under-served market segments, as well as use EMV as a stepping stone to mobile.
• Financial institutions will move away from being cost-focused to businesses that are looking to generate new revenues by providing value-added services for their customers.
• Mobile payments will see consolidation amongst vendors, and retailers will start to work with banks.
• Mobile will continue to be a significant part of the payments world, and financial institutions will begin to understand how they can make the most of mobile and start putting some business models behind and monetizing the new technologies.