future of payments 1
TRANSCRIPT
THE FUTURE OF
CURRENCY PAYMENTS &
APRIL 2015
2
WHAT I’LL COVER
Trend drivers New ways to pay New forms of value exchange New payment players
TREND DRIVERS
Never in the history of the payments industry has there been a time of such disruption and opportunity across regions. Digital technologies will upset the competitive order and the role that
payments play both in the operations of businesses and in the daily lives of consumers.”
—BCG PERSPECTIVES, “Global Payments 2014,” Sept. 17, 2014
—NICK BILTON, The New York Times
TREND DRIVERS
MILLENNIAL MINDSET DISTRUST IN FINANCIAL INSTITUTIONS TECHNOLOGY DATA BREACHES TRICKLE-UP INNOVATION HEDGE AGAINST ECONOMIC CHAOS NON-FINANCIAL PLAYERS DIVERSIFYING
NEW WAYS TO PAY
—NICK BILTON, The New York Times
MOBILE WALLETS
Broadly speaking, mobile wallet users swipe, tap, wave or otherwise prompt a smartphone to pay after initial setup (providing credit card or bank account information and potentially linking to various loyalty programs). Technologies vary but include near field communication (NFC), Bluetooth and bar code systems. For people with little to no access to commercial banks, the advent of mobile money—texting to send or receive payments using basic phones—has been a godsend.
NEW WAYS TO PAY
61 MILLION+
Active mobile money accounts worldwide as
of June 2013*
—NICK BILTON, The New York Times
MOBILE WALLETS (cont’d.)
NEW WAYS TO PAY
61 MILLION+
Active mobile money accounts worldwide as
of June 2013*
—NICK BILTON, The New York Times
BRANDED APPS
NEW WAYS TO PAY
Active mobile money accounts worldwide as
of June 2013*
As banks, tech giants and new entrants vie to dominate in the mobile wallet space, Starbucks and other brands are creating their own apps, enabling frequent customers to pay seamlessly. In some cases—notably with taxi services like Uber and fast food brands—the apps let users both order and pay, reducing wait times or hassle. In other cases, as with Starbucks, the apps draw users by folding in loyalty rewards or coupons. Brands benefit by collecting extensive customer data and drawing in impatient, cash-averse Millennials.
—NICK BILTON, The New York Times
WEARABLES
NEW WAYS TO PAY
Active mobile money accounts worldwide as
of June 2013*
Wearables—Internet-connected devices worn on the body—promise an even more seamless method of payment than mobile phones. The vision is that consumers will simply hold up a watch, tap a wristband or perhaps issue a verbal instruction to Google Glass.
Glasses: Some mobile-payment players are betting on consumers paying with a gesture, tap or voice command using Glass or other high-tech specs. Eaze, a startup pushing the idea of “Nod to Pay,” links to two bitcoin payment systems and plans to add fiat currencies.
—NICK BILTON, The New York Times
WEARABLES (cont’d.)
NEW WAYS TO PAY
Active mobile money accounts worldwide as
of June 2013*
Watches: Several payment apps work in tandem with early entrants on the smartwatch market. These include PayPal’s app for Samsung’s Gear 2 and WearBucks for owners of Android Wear watches.
Wristbands: For people willing to link up credit or debit card information, smart wristbands may have a long-term role to play as a way to make fast purchases at events like music festivals or destinations like theme parks.
—NICK BILTON, The New York Times
EMAILS, TEXTS AND TWEETS
NEW WAYS TO PAY
Today more and more companies—from startups to financial institutions and tech giants like Google—are enabling person-to-person payments, bill payments and product purchases via a simple message. For instance, French bank Groupe BPCE will enable people to tweet money to one another via its S-money mobile-wallet subsidiary, thanks to a partnership with Twitter.
A growing array of alternative currencies—ranging from cryptocurrencies to local currencies, branded currency and social media currency—is supplementing or even replacing conventional money.
NEW FORMS OF CURRENCY
Money is always only a human creation, kind of a collective illusion … It’s something we invent as societies and states and communities, and we can reinvent it if we want to.”
—BILL MAURER, dean of social sciences and professor of anthropology and law, UC Irvine
NEW FORMS OF CURRENCY
—NICK BILTON, The New York Times
CRYPTOCURRENCIES
Experts place the number of businesses accepting bitcoin as high as 80,000 worldwide, a wide majority of which are small merchants. But some bigger players across categories are earning buzz by welcoming the currency, in some instances experiencing an initial boost in sales. Most use Coinbase or another bitcoin middleman, shielding themselves from risk while paying much less in fees than with credit card transactions.
This crowdfunded documentary
follows a newly married couple
trying to get by on bitcoin alone.
Prominent businesses accepting bitcoin:
• Dish Network
• Dell
• United Way
• Expedia
• Overstock.com
• The Sacramento Kings
NEW FORMS OF CURRENCY
—NICK BILTON, The New York Times
ALTERNATIVE BRAND CURRENCIES
Social media as currency: Brands commonly offer incentives in exchange for Facebook likes or Twitter follows. Now, with social media ingrained into the daily lives of many, some are evolving this idea by enabling consumers to acquire products or discounts with social media actions in lieu of cash.
Danish beer company
Carlsberg partnered with bars in Denmark to
extend happy hour for drinkers who posted
social media photos with the hashtag
#HappyBeerTime
NEW FORMS OF CURRENCY
—NICK BILTON, The New York Times
ALTERNATIVE BRAND CURRENCIES (cont’d.)
Tweet-to-pay pop-up shops: These temporary locations provide unique experiences that consumers are keen to capture and then share with their followers, increasing brand engagement and stimulating word-of-mouth. In London, Weight Watchers created the Feel Good Café, where visitors paid with social media shares. And Marc Jacobs launched a Tweet Shop where guests received free gifts based on their social posts.
Disruption in the payments and currency sphere is opening the way for new players to act as intermediaries between consumers and their money. We’ll see consumer interaction with banks and other traditional financial institutions wane as newcomers offer innovative or compelling solutions. Consider that 73% of Millennials would be “more excited about a new offering in financial services from Google, Amazon, Apple, PayPal or Square than from their own nationwide bank,” according to Viacom’s Millennial Disruption Index.
NEW PAYMENT PLAYERS
NEW PAYMENT PLAYERS
—NICK BILTON, The New York Times
BRANDS AS FINANCIAL INTERMEDIARIES
Mobile operators, tech giants and others are making forays into the financial space, taking on roles traditionally filled by banks and other financial services companies. By doing so, these companies can track spending patterns and behavior, as well as reduce interchange and processing fees. The mobile wallet is a key driver. Mobile payment transactions facilitated by “non-banks” will increase from 1.1 billion in 2012 to 7 billion in 2015, according to a forecast by Capgemini and The Royal Bank of Scotland.
72% of North American
Millennials would be likely to bank with at least one
nonfinancial services company if it offered
banking services*
*Source: Accenture’s 2014 North America Consumer Digital Banking Survey
NEW PAYMENT PLAYERS
—NICK BILTON, The New York Times
BRANDS AS FINANCIAL INTERMEDIARIES (cont’d.)
Tech companies and
messaging services are well positioned to integrate
payments systems. Google now offers free P2P
payments through Gmail or its Wallet app, and South
Korea’s KakaoTalk recently launched the PayPal-like
KakaoPay.
NEW PAYMENT PLAYERS
BRANDS AS FINANCIAL INTERMEDIARIES (cont’d.)
Retailers: Retailers have long provided financial services, but some are expanding more assertively into the space. Both Marks & Spencer and Tesco recently started offering personal checking accounts in the U.K. Walmart has been targeting the underbanked. This year, the retailer launched a money transfer service—enabling customers to send funds to or from any Walmart in the U.S. and Puerto Rico—and partnered with Green Dot Corp. on GoBank, a mobile checking account with a linked debit card.
THANK YOU
ARNAB GHOSH
Head of Cards & Consumer Loans
Vietnam International Bank
+84 168 884 3838