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Forget Interchange Relief—Even Those Developing Mobile Payments Say Banks Will Still Be In Charge
In fact, those people believe banks will just keep getting more central to payments—and so will their interchange fees.
Mobile payments will introduce new entities to the mix, namely mobile operators. But they will not radically change anything. From a payments perspective, it’s business as usual, with just a new form factor of credit or debit card in the shape of a phone. The underlying rails that make the payments happen today will continue to be used in the future.
So what does this mean? When it comes to mobile payments, everyone should take a step back. Beyond the hype, the actual payment part is pretty dull and traditional.
Remember the Exxon Mobil Speedpass keyfob? Exactly. It hardly set the world alight having the means to pay at the pump with a small plastic dongle rather than a credit card. Similarly, it will hardly set the world alight paying with your phone at the point of sale.
Mobile payments are boring. There, I said it.
But the physical act of paying isn’t really the exciting part anyway. The capabilities of current-generation smartphones, in terms of computing power, location awareness, broadband connectivity and subscriber penetration, facilitate entirely new models of interactivity between merchants and consumers. Instead of current-generation checkouts that spew a stream of coupons at you as you have just finished bagging, you can now have highly targeted coupons sent to you in real time to augment the retail experience, indexed to store inventory so that perishable items receive faster turnover.
Or consider dynamic pricing that can change at various times of day to encourage greater consumer throughput. Or that the point of purchase can now be a clerk wandering around with a mobile phone, rather than being stuck behind a dusty checkout.
It’s time to shift our focus from the payments part to the far greater value proposition of what mobile can do to completely restructure the retail environment. If you are thrilled by the prospect of visiting an ATM, then mobile payments are probably for you. Personally, I’d much rather my phone let me know that there’s 80 percent off my favorite all-you-can-eat sushi buffet for the next hour.
Please reach out to me and share your thoughts.
Cards issued by European banks when used online cross border don't usually support AVS checks. So, when a European card is used with a billing address that's in the US, an ecom merchant wouldn't necessarily know that the shipping zip code doesn't match the billing code.
-Marc
