The (Payment) War of Succession




That’s certainly an evocative title. Cash is dead, and now the noble families of the payments landscape vie for primacy.

Like the wars of Scottish Independence? Exactly… well, not really. It’s difficult to confidently link digital wallets and William Wallace.

Yes, it is. But, over half of British transactions are now made using non-cash methods, opening the floor to claimants of the crown of commerce.

Like barter? No, barter died centuries ago, and is now a mere footnote in the history books of payment.

So, what’s the line of succession looking like up until now? Cash replaced barter, cards replaced cash, and now a whole roster of alternative payment methods are seeking to usurp plastic.

Who are the pretenders? First up, we have the mobile wallet.


What’s its claim to the crown? A direct descendent from the card - of true blood and lineage.

Of noble birth, then? Something like that. The mobile wallet is directly linked to your bank account, in the same way your plastic card is.

Cut from the same cloth. Right. Except, the security benefits of the mobile wallet are potentially enormous. The mobile wallet does not store your card details, and instead issues a tokenised card number when making purchases.

Go on… So, if the merchant environment is compromised, you haven’t passed on any information that can be used in other transactions.

A guardian of the realm. Could be. The mobile wallet claim is given pretty heavy support by the ubiquity of the mobile phone.

Funny that… Anyway, on to the second pretender. Right you are. Cue Open Banking. Or, as it will probably be presented to the consumer, Pay by Bank.

And the claim? Open Banking is a bit of an upstart. Hasn’t got the lineage, hasn’t got the coat of arms. What it does have is an incredibly effective way of seamlessly combining loyalty schemes and payments. It also cuts out interchange and network fees for the merchant.


Oh yeah? Yeah! By linking your bank account transactional data and the merchant via a third party provider, the merchant can reward repeat purchases without a specific loyalty card.

And, for the merchant? For the merchant, Open Banking transfers money directly from the consumer account to the merchant account, using a third party provider but cutting out the network and acquiring bank.

And the fees associated with them? You catch on fast.

A champion of the people. Precisely, the William Wallace of the payments ecosystem.

Roll up, the third contender. Here comes cryptocurrency.


Hit me with the claim. Cryptocurrency looks to redefine the rules of engagement - removing the bank from the centre of the payments process.

We’ve got ourselves a revolutionary. Possibly. But one that has to find a way to hit critical mass with usership before any proud financial institutions are toppled by it.

Like if a global social media company adopts and integrates cryptocurrency? Exactly. And guess what Facebook are currently working on.

Some sort of Facebook coin? You hit the nail on the head.

And, when can we expect to see Facebook coin storm the garrison? Later this year, according to some sources.

Nobles, upstarts and revolutionaries, the makeup of any good war. Damn straight. Cash is dead, and plastic is acting regent whilst several pretenders are embroiled in the melee of technological advance. In a year’s time, a very different force could wear the crown of commerce.

 

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