Sorry, this title doesn’t really mean anything. It’s just that we felt a bit irritated reading a recent Brett King post on his blog (When Payments Disappear, and Value Emerges, October 11, 2013). So we tried to make up a catchy yet empty title, like his. Maybe you’ll think this is too harsh a judgment. Well, take it as pure jealousy. Brett King is far more famous and influential than we are. Nevertheless, Brett, being famous and influential doesn’t give you the right to write things that are obviously too simple to be true. Bankers are reading and they could believe you!
In a few words, Brett King advocates that there is a complexity cycle with modern payments based on transmission and identity that we simply didn’t need with a cash based system. Banks and payment players learned to value complexity as protection from fraud and a barrier to entry, but today it is that same complexity that is being targeted by all the latest technology, especially mobile.
You jump in a taxi, you take your ride and at your destination, you hop out of the car, payment is automagically executed through the Uber network, and a receipt is delivered to your phone. The payment has all but disappeared. You didn’t have to exchange cash, swipe or tap – this is the ultimate expression of a payment, says Brett King. A system that is smart enough to identify you, but eliminates all of the payment friction. So the way payments evolve will not be making payments faster or better ostensibly. The payment will disappear, becoming an embedded instance in another engagement or interaction. The future is about what happens before the payment and after the payment, not how the payment happens. That’s like hitting the send or dial button on your mobile – it just has to happen with minimum fuss.
Technological fantasy is always the same: it designs a world where all “friction” has disappeared. An all-smooth world where things you have to work out today will simply be totally automatic; allowing you to concentrate on the noble issue of human interactions. Brett King: “When the payment disappears, it doesn’t matter how you paid, it matters what the payment did for you. Whether it is removing the complexity, or data that creates great context and value before and after a payment. The coming revolution is not in payment tech, but how the payment disappears and value emerges.” But this world is Utopia! It is nowhere. Of course, at the end of your taxi ride you will have to check the real amount you are debited of. You will have to accept it and you will maybe add a tip. You will need to record the transaction in a secured way. In other words, you will still have to pay for the ride, maybe using a simpler and more convenient system than today but even this is not obvious (imagine the possible security weaknesses of a system like Uber!). That’s why mobile contactless payment will not be a revolution: it is not really more convenient and rapid than an EMV chip card and it is only useful for small payments in certain situations (car park, bus)
The stake of payment evolution is not technological, nor will it magically erase the fact things have a price tag. It has to do with the fact that today clearing settlements between vendors and buyers can be achieved from non-bank accounts, by other players than banks. However payment will really disappear when prices will not matter anymore – when money will have lost all value! After all, our title is not so meaningless…
Guillaume ALMERAS & Lynn SCHWARTZ/Score Advisor
Stratégies des nouveaux moyens de paiement