Will mobile payments kill credit cards?
We have no shortage of ways to process credit cards today, however, for the savvy, the future of credit card processing is in the digital space.
We’re already starting to see the online processing market take off.
New innovations in mobile banking are making it possible to transfer the entire payment experience from the plastic credit card to your mobile device. The bigger question is, can businesses accommodate these new forms of payment? New upstarts with funny names that sound nothing like typical financial names – like Dwolla, Venmo and Square – are going far beyond just enabling you to use your mobile devices to check balances on-the-go: they are transforming mobile devices into payment mechanisms at point-of-sale destinations around the nation. New geo-fencing technology is making it possible for apps loaded on your smart phone to “communicate” with the payment systems of retail stores, eliminating the need to stand in line to make a purchase or even to interact with a sales clerk. So at what point will mobile devices end up killing off the $2 trillion credit card industry entirely?
Nearly two years ago, it was clear that financial start-ups were already chipping away at the domination of the big credit card players, who essentially collect a “tax” of as much as 3.5% on every single transaction that passes through their payment networks. Processing fees are where the money is, and if the credit card paradigm starts to crumble, where will all that money go? Hospitality organizations that rely heavily on credit card revenue hope some will remain inside their business.
With a rapidly growing number of customers managing their finances electronically and using their cards or smartphones to pay for goods and moving away from cash, further disruption and innovation in payment systems is easy to predict.
The foundation of the future of credit card processing will be based on two pillars: speed and efficiency.
To that end, mobile payments will be the wave of the future. Apple Pay, Samsung Pay, Chase Pay, Android Pay, Microsoft Wallet, Walmart Pay, Kohl’s Pay, and more will all become habitual for shoppers, who will reach for their phones instead of their wallets.
Are you ready? Is your credit card processing company ready?
The future is here, and it is certainly mobile.