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The Future of PaymentsCapitalizing on our unique blend of research and resources, Double Diamond Group has always kept our clients ahead of the curve. Here are some of our recent predictions.
Apple Pay was the talk of the Money20/20 trade show last month, but should it have been? Before Apple Pay can become a dominant payment vehicle, merchants need the ability to accept it (only about 2% of merchant locations can do so today), so it’s far more important to complete that prerequisite.
Why is this transformational? Innovators of any type (payment networks, payment facilitators, digital-wallet providers, loyalty providers, solutions for the automated clearing house, etc.) could obtain instant acceptance at a wide variety of POS locations. It also removes massive barriers to entry, which will create competition across the board.
Under this model, app-store providers can monetize their technology solutions and merchant footprint through a much broader set of software solutions that they would not be able to create on their own. The same is true of software developers. They can monetize their ideas and code in ways that were never before possible.
Last but not least, acquirers and independent sales organizations can monetize their distribution channels across an entirely new set of services (not just payment and POS), without needing to become experts in how merchants run their businesses. And, by creating a wide set of new, marketable services, app stores also reduce the dependency these providers have on the payment networks. The payment networks could soon be just another app within a store that includes thousands of apps. For example, banks or groups of banks could offer payment services directly to merchants via the app stores, cutting out the payment networks altogether.
Apple has proven the app-store model via its consumer app store and devices. Android/Google/Amazon have continued that model and have shown that it is truly scalable. Now merchant app stores are next, and if this takes off everything we know about the payments business could change.
Enablement of NFC payments to accept network-sanctioned solutions such as Apple Pay may cost a merchant from a few hundred to a few million dollars. For the same price, however, merchants could eliminate the need for networks altogether, and that could be priceless.
Digital Transaction, December 8, 2014
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Monday morning on my early flight to NYC, I have to admit I was anxious. My plan was to download iOS 8.1 with Apple Pay on landing, and I was pumped to see it in action. I had waited patiently since September 19 when Apple Pay was announced, and finally launch day had arrived.
The topic of mobile payments is not new. Business models, technologies and standards have consumed conversations related to the future of commerce since the early 2000’s. However, after these many, many years, I was finally able to give it a spin and see if my thoughts and predictions had any real world merit.
Did Apple Pay meet my expectations, and live up to my predictions from years ago? It really was very cool. My first transaction was easy, convenient, and with my consumer hat on, it definitely was secure.
After I landed, I installed iOS 8.1 and loaded Apple Pay with two credit cards and one debit card, I jumped in a taxi to Manhattan. I did not have to type in a PIN to access my mobile wallet or close any apps that were open, all I had to do was wave my phone near the reader, and it automatically opened my wallet. I provided my Touch ID to verify it was me, and just like that, it was done. It took about one second to complete, and my default card was automatically charged – the transaction appearing in Passbook. So cool!
For years, I have felt that the only way to consumer adoption is simplicity, ease and speed. To achieve those things, it’s imperative that you don’t have to think about it, press buttons, enter codes or any other silliness. Consumers want to pay – simple. With their card, they just swipe – super easy – but definitely not easy for mobile payments to compete with. So, what does that mean? As I’ve said for years, it’s crucial that the simple act of tapping “pulls” your card out, regardless of what screen you are on – even if it’s locked, with the screen off. Apple accomplished exactly this, and it’s the “killer app” that crushes the alternatives. ONLY Apple and Google, who control the operating system, can control the phone to this degree. It will definitely put pressure on Paypal, MCX and the other contenders – and i just don’t know how they could overcome it. Is this Checkmate?
This all reminded me of a video interview I did on NFC versus Cloud-based payments about a year ago. In the video I talk about this very thing; how tapping for in-person mobile wins, and why the very act of using a mobile device has to behave just as I mentioned above – it has to make it easy by not requiring the consumer to do anything other than tap and verify themselves.
I am not sure when my excitement will start to fade, but I will definitely be using it again soon, and I can’t wait to see what this does for the industry.
Major research from Double Diamond Payments Research claims that the channel is not dead or dying, but does need to transform itself in order to accommodate a technology-based ecosystem and rapid growth in the ISV distribution channel.
Learn more about the research:
ISO & Agent, May 23, 2014
Acquirers Should Learn POS And Software, Report Urges
Double Diamond Group joins industry leaders in predicting that technology will have a major impact on the way we sell payments, requiring successful companies to either sell through ISVs or become ISVs themselves.
Read about what it means to become a successful payments company today:
The Real Significance of the $1.65 Billion Deal For Mercury
Digital Transactions, May 14, 2014
Integrated Payments Trend Is in Early Innings, But Going Strong
Payments Source, May 27, 2014
Read our case study on frictionless payment acceptance:
Read articles in the trade media:
How Merchant Aggregators Are Shaking Up Payments
Digital Transactions, April 2014
Switch It Up This Year: Investigate Aggregation
The Green Sheet, January 13, 2014
Double Diamond Group predicts mobile payments are set to explode, saying “the nexus of the smartphone and innovative technologies like NFC will enable mobile payments to challenge traditional payment methods. In the past few thousand years, currency has shifted only three times. That’s all about to change.
Learn about Global Mobile Payments Strategy with this case study.
Watch the news and see the video:
Your Cell Phone Is The Latest Tool For Finding The Best Deals (CBS4 News Video)
Mobile Contactless Payment Alliance (CBS News)
Read articles in the trade press:
Enjoy our article in Internet Retailer: