If you've been following the payments industry (Electronic Funds
Transfer, EFT, to be more precise), it’s clear that there are many players
vying for a few critical spots in the processing chain…These players, some of
whom are heavy weights, know that securing a spot will keep them relevant for
consumers & merchants, and give them unprecedented visibility into the new
connected commerce.
Let’s
review the critical roles…Consumers need wallets to store their payment methods
(Wallet). Merchants need registers to hold the money for goods delivered
(merchant accounts), and accept as many payment methods as possible. In
addition, a network is needed to transfer the money from the consumer wallet to
the merchant register (payment networks). Needless to say, we’re simplifying
the picture for the sake of illustration…there are numerous other roles, such as
risk, compliance, optimal routing, value add, fraud detection, fx, x-border,
etc…

Merchant payment acceptance (POS, NFC, Check-in) has a direct impact on how they manage revenues, cash flow, merchandising & inventory, marketing, incentives, and consumer foot traffic (both online, offline, and mobile). Merchants are first and foremost interested in managing their business…getting paid is super important too, but it’s an expectation…just as you expect an ATM machine to dispense the exact amount you requested, and reflect it correctly on your account. That’s where the ISO (independent sales organization) becomes a critical link in merchant EFT engagement. ISOs are good for packaging (customized) solutions, in-depth understanding of merchant segments, providing contextual support, and enabling mass reach for service providers.
The networks are the plumbing that carries these transactions.
The (debit, credit) networks are distributed, secure, global, and highly
available. They’re federated by design, no one player owns the whole echo
system…much like the internet. It’s a very valuable component of the equation,
and as such, players owning networks have a very loud voice in driving &
influencing the EFT industry.

When you control the token, you know the consumer, you know
their spending habits, demographic, preferences, and you have access to their
wallets in the cloud, and that’s pure gold. More importantly, merchants,
marketers, card brands, and channels would be very interested in big data
insights to target offerings to their consumer segments. Those insights bring
tremendous value, hence, they are worth a lot of money. Keep in mind that data
insights and privacy go hand in hand, it’s not about sharing/selling consumer
data, it’s about general market insights to help personalize the experience.

Mind you, one of the best wallets out there is the Paypal
wallet. It’s the most diversified, containing a lucrative funding mix
(credit/debit cards, bank accounts, credit lines, gift cards). It’s the most
global, 167 million active users, transacting globally (CBT). And it’s the most
aligned with the company brand…when you think Paypal, you think payments…can
you say the same for Apple, Google, or Amazon?

The catalyst that’s driving the inflection point of wallets,
networks, and merchant acceptance is EMV mandate that starting in
October 2015, POS terminals must support EMV standard, including chip cards.
Merchants that don't support the standard will be liable for fraudulent, lost,
or stolen card transactions. It’s projected that 90% of cards and 87% of terminals will be EMV compliant by
2017, with the majority of that adoption in the first 18 months.
The writing is on the wall, The next 18 months will dictate
the next 7 years of payments industry leadership. Major players are staking
their claim in the new and exciting payments space…the winner is a partnership
that builds a compelling experience using a Wallet from a trusted brand,
enabling ubiquitous Merchant Acceptance, powered by a secure, highly available,
and global payments network.