teaser1Happy New Year! Reflections on consumer payments in the next decade

The turning of the year traditionally prompts personal reflection, if not resolutions. It’s the time in the busy working year to step back and think about the important but not urgent. This is all the more true as the decade changes: Roll on the 'teens'!

In the world of payments, the 'noughties' were quite a decade. In 2000, cash and cheques were king and queen, cards mostly came in two flavours – ATM/EFTPOS or credit – and no-one bought anything much online. In 2010, cash is king only of the micro transaction, no-one under 30 has a cheque book, cards come in every type and combination, and remote purchases and payments dominate the horizon. What is likely in 2020? 

I like this quote, from a blog by Scott Adams, the inveterate, irreverent blogger and creator of the 'Dilbert' comic:

 “Technically, you're already a cyborg. If you keep your cell phone with you most of the time, especially if the earpiece is in place, I think we can call that arrangement an exobrain. Don't protest that your cellphone isn't part of your body just because you can leave it in your other pants. If a cyborg can remove its digital eye and leave it on a shelf as a surveillance device, and I think we all agree that it can, then your cellphone qualifies as part of your body. In fact, one of the benefits of being a cyborg is that you can remove and upgrade parts easily. So don't give me that 'It's not attached to me' argument. You're already a cyborg. Deal with it.”

As usual, Adams points to an uncomfortable truth: we are increasingly dependent, by habit if not surgery, on our technology.  The rise of third generation mobile computing usage was striking as the last decade ended.

Adams takes it to the next level. He proposes the 'dilbert pocket' – a shirt pocket with handy window for the exobrain’s 'eye' (camera). Once you have the dilbert pocket, says Adams, the way is clear for your exobrain to really start adding value.  There are already apps (mobile computing applications) that will interpret and provide data on whatever you 'show' them: play your phone a song and it will tell you the artist and album, plus where to buy it. The next step (although this is harder) is that your exobrain will be able to recognise someone approaching you, and whisper their name in your ear.

So where do payments fit? Mobile payments have been much talked about, but have not met the more optimistic predictions in the noughties. As is so often the case, it is not for lack of technological innovation. Rather, it is a question of customer need and critical networking mass. From an Australian consumer’s perspective, what is the 'wow' factor in an m-transaction compared with an electronically authorised card transaction? 

For me, this is where the exobrain idea comes into its own. Like most Australians, I am using card and PIN for more and more of my shopping, and cash for less. What irritates me (particularly after Christmas) is my unwieldy, messy wallet. The problem is not the small amount of reserve cash in it, but the expanding bundle of cards and tickets (payment, store discount, loyalty, travel, insurance, etc etc), and the dog-eared wad of assorted receipts that are my only proof of purchase and reconciliation tool.

If I could get my mobile to hold virtual 'cards' (all of them, not just one), and replace paper receipts with reconciled account data, that would be great. Then of course, there can be apps for my exobrain to read the bar codes on shop merchandise; couldn’t it keep track of my 'shopping cart' as I wander around the shop (real or virtual), maybe even advise on discounts and competitive prices elsewhere, before it completes payment and reconciles automatically with my bank? My budgeting app could be hooked up to warn me when a purchase will take me over my card limit or budget – with an override button of course!

Like all predictions this is probably off-beam in some respects. (The dilbert pocket seems like fashion suicide to me, but who knows?) Whatever actually comes to pass, convergence of payment methods (both card- and internet-based) seems set to continue into the 'teens': it’s a fair bet the consumer of 2020 will expect to pick the account, the provider, the payment method and the loyalty programme on command (touch screen? voice? brainwave?). The leap forward is not so much how you do each transaction; it is increased choice and control combined with the simplicity of every payment seamlessly integrated on one device with the rest of your financial life. 

Consumers seem happy to pay for new mobile services of a breathtaking diversity, providing new markets, and opportunities for new revenue. Payments should not be any different, so long as the service is genuinely new. The challenge for us in the industry is establishing the safe, common framework across multiple different kinds of players for these services to be made real. 

Sounds like we will have plenty to keep us occupied this decade!

Staff change at APCA

At the end of 2009, APCA lost its respected Head of Self-Regulation, Temogen Hield, to the newly established EFTPOS Payments Australia. We wish Temogen all success in this exciting and challenging new venture. 

We are also delighted to welcome Susan Bray as the new Head of Self Regulation. Susan comes to APCA with a pedigree in network industry self-regulation, having been a senior regulatory policy executive at ASX and with experience in a range of other financial services roles. We are lucky to have secured Susan’s services, and I am sure members will enjoy working with her.