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8 Bold Predictions for the Payment Industry
Posted on Jan 04, 2013
By: Leilani Doyle
I always enjoy the start of a new year and all the assessments and predictions that arise as we reflect on the year that ended and look forward to the year ahead. Karen Webster from PYMNTS.com took a look into her crystal ball and came up with some predictions regarding payment technologies and industry changes for 2013. Some, I believe, are spot on while others require a stretch of the imagination.
Below is a summary of the eight predictions along with my thoughts on the subject. I ask our readers to join the conversation and let us know which predictions you most agree with or take exception to.
- NO NFC in 2013: I completely agree with Karen’s opinion that “The NFC payments debate will slowly die in 2013.” Anyone that has followed this blog knows that NFC just had too many barriers to acceptance and not enough value to get anyone excited. In her article, Karen cited that David Marcus of PayPal took a strong stance on this in December. So if one of the biggest disruptors in the payments industry today is foo-fooing NFC, then I think the writing is on the wall. However, too much money has been invested to date for NFC to take a hard fall. A quiet retreat will be more likely. Better kill it while the industry is focused on EMV so no one notices.
- Apple stocks will soar: According to Karen, “Apple might be the safest stock to own right now”. While that might be true in the short term, I’m not sure how that translates over the next three years. In her article, Karen cited a bold statement by Mark Rogowsky of Forbes who predicts that Apple stock will close the 2013 year at $800 per share, almost doubling the current valuation of $513 per share. Not sure what this has to do with the payments industry quite yet, but through iTunes, Apple does have access to hundreds of millions of consumers and their payment information. They could become a player in the payments market, but this prediction is solely focused on Apple’s traditional business of building hardware.
Mr. Rogowsky cites the key to Apple’s growth as faster product refreshes, cheaper iPhones and expansion into the China market. All of which seem to doom the elegance, quality and simplicity of Apple products. Short term this may deliver profits to the shareholders but will it position Apple to continue to deliver innovations that influence the way we use technology? Without that Apple will surely lose its mystic and power to dominate the market.
- The Dodd-Frank reforms will work: I might be inclined to agree with this prediction if I understood better what “working” means. Karen talks about the recent indications from the regulatory agencies and the Fed that have said no to some major bank mergers proving that the regulatory environment is standing firm against the continued consolidation among big banks. And while I agree that continuing to build mega-banks that are so complex that even their own executives fail to fully understand their financials (think back to the JP Morgan trading loss), does that count as success for the reforms.
I am not convinced by the arguments presented in this article that Dodd-Frank Reforms will indeed work in 2013. I believe that the most powerful agent of reform is not through increased regulation but by public opinion. Right now public opinion is sour on big banks. I believe this is why we are seeing a higher number of unbanked in the U.S. and a growing number of non-bank entities encroaching on traditional bank services. Would really love to hear from the Bankers out there how Dodd-Frank is impacting their business strategy and if it is indeed really working the way regulators intended.
- Mobile wallets will be all the hype: While it may be true that there will not be a major breakout in mobile wallet usage in 2013, I don’t believe mobile wallets are all hype. I base this conclusion on my recent experiences over the Christmas holidays with my daughter home from college and my son visiting from his recent relocation to Denver. Their iPhone is never far from reach. They sleep with their phone near at hand, since it also functions as their alarm clock, they organize their activities with it and even play games on it when bored.
I am not even sure if my son has a real wallet. He tends to put his debit card and drivers license in his pocket if he is going out. My daughter left her wallet in my car, but didn’t realize it for a couple of days...hat would never happen with a phone. So while a mobile or virtual replacement for the wallet may be a difficult problem to solve, I don’t believe it is all hype.
- Curated commerce will continue to evolve: Shopping for a lifestyle or look is another richer, more engaging trend we are seeing across eCommerce industries. This seems like a natural evolution of eCommerce as visual influencers are key in all types of buying situations.
- Identity security will be a big issue: Tell me something new. Identity security is already a big issue. Except now that we have let the cat out of the bag by sharing all types of private information with numerous websites and social media outlets, how do you ever get it back?
- Prepaid’s popularity is here to stay: Karen’s assessment is that prepaid is likely a direct response to the Durbin Amendment’s whack to traditional DDA accounts. With prepaid cards there are too many mouths to feed and the consumers aren’t sticky, meaning it is not the greatest business case. However, it is one way to re-imagine banking services.
- EMV won’t make it in the U.S.: Karen goes out on a limb and declares that EMV as a technology is too late to the party to make it as the new standard in the U.S. The problems that EMV was designed to solve in Europe 20 years ago either don’t exist today or will be solved by some newer technology. Wish I knew what this newer technology was, since Karen already predicted that mobile wallets are all hype.
I invite you to read the entire set of predictions at PYMNTS.com.