What are some potential disruptions that could significantly change credit card usage?
Payments
Asked by Question Bot07/Aug/20151 answer
1 Answer
F
Faisal Khan
Answered 07/Aug/2015
I don't have a ready taxonomy reference to refer to, but yeah, the social payments seems an adequate phrase to describe it.
With the advent of a more connected societies (thanks to Internet and the mobility of smartphones), we are able to communicate more easily and frequently across various platforms in a near frictionless manner.
Payments in the next 20 years would have gravitated to what I would call social payments. It would be like funding your accounts (whether you do it via debit cards, cheque, or direct bank account transfers), the payment instrument would most likely be your mobile phone and the apps that run on it, would be the channels via which payments can be made.
It is going to be inherently difficult to just eliminate credit cards. Who know how VISA and MasterCard will morph to become the payment companies for Gen Y and Gen Z.
American Express is already working towards that goal. They look at plastic today as mother-in-law, something you can do without. Amex is now working towards being 100% digital somewhere down the line.
The VISA/MasterCard rails will have competition for sure. I am 100% convinced of it. Newer, faster, more secure, more 21st Century, micro-transaction enabled, multi-currency enabled, crypto-currency enabled, virtual credit enabled payment networks.
Whether this comes from Bitcoin, or some company yet to be born, or from one of the tech giants, or just plain adoption of flat-fees networks, remains to be seen, but I can tell you one thing, people are sick and tired or paying "%" (percentage) of their transactions as fees. The payments world is slowly gravitating towards flat-fees, whether we like it or not.
Email had a chance to change payments, but since we've been stuck with the old SMTP/IMAP/POP protocol, any chance of embedding a protocol native payments in email, is pretty much out of the box. We haven't been able to change email since its inception.
Crypto-currencies certainly feel like disruptors. Whether it will be Bitcoin or Ripple or something else, remains to be seen.
The real traction will come from merchants. Mobile phones are becoming more powerful by the day and it is only a matter of time before the traditional POS machine is pushed out completely and replaced by the mobile phone.
Once merchant have a way to accept payments in the smoothest of ways, and with the connectivity they have to the Internet, they would have access to a myriad of alternatives as far as payments acceptance is concerned. Right now Bitcoin (for example) may be too cumbersome a process to introduce, but down the line I am sure the experience will get better.
These payments would be in the form of credits, transferable, value-driven credits. Credits that are interchangeable and swap-ready with the fiat currencies around the world. The argument of security, bank issuers, bank acquirers, dedicated (secure) payments networks, etc. would not hold valid, as these problems would have been solved by then.
The fine writing on the wall says nothing lasts forever whether or not it applies to credit card companies or not, remains to be seen, but I for one feel that the credit card debt trap, percentage driven transactions will be the reasons why we will have newer payment rails and with it, newer payment instruments that will dethrone credit/debit cards.
With the advent of a more connected societies (thanks to Internet and the mobility of smartphones), we are able to communicate more easily and frequently across various platforms in a near frictionless manner.
Payments in the next 20 years would have gravitated to what I would call social payments. It would be like funding your accounts (whether you do it via debit cards, cheque, or direct bank account transfers), the payment instrument would most likely be your mobile phone and the apps that run on it, would be the channels via which payments can be made.
It is going to be inherently difficult to just eliminate credit cards. Who know how VISA and MasterCard will morph to become the payment companies for Gen Y and Gen Z.
American Express is already working towards that goal. They look at plastic today as mother-in-law, something you can do without. Amex is now working towards being 100% digital somewhere down the line.
The VISA/MasterCard rails will have competition for sure. I am 100% convinced of it. Newer, faster, more secure, more 21st Century, micro-transaction enabled, multi-currency enabled, crypto-currency enabled, virtual credit enabled payment networks.
Whether this comes from Bitcoin, or some company yet to be born, or from one of the tech giants, or just plain adoption of flat-fees networks, remains to be seen, but I can tell you one thing, people are sick and tired or paying "%" (percentage) of their transactions as fees. The payments world is slowly gravitating towards flat-fees, whether we like it or not.
Email had a chance to change payments, but since we've been stuck with the old SMTP/IMAP/POP protocol, any chance of embedding a protocol native payments in email, is pretty much out of the box. We haven't been able to change email since its inception.
Crypto-currencies certainly feel like disruptors. Whether it will be Bitcoin or Ripple or something else, remains to be seen.
The real traction will come from merchants. Mobile phones are becoming more powerful by the day and it is only a matter of time before the traditional POS machine is pushed out completely and replaced by the mobile phone.
Once merchant have a way to accept payments in the smoothest of ways, and with the connectivity they have to the Internet, they would have access to a myriad of alternatives as far as payments acceptance is concerned. Right now Bitcoin (for example) may be too cumbersome a process to introduce, but down the line I am sure the experience will get better.
These payments would be in the form of credits, transferable, value-driven credits. Credits that are interchangeable and swap-ready with the fiat currencies around the world. The argument of security, bank issuers, bank acquirers, dedicated (secure) payments networks, etc. would not hold valid, as these problems would have been solved by then.
The fine writing on the wall says nothing lasts forever whether or not it applies to credit card companies or not, remains to be seen, but I for one feel that the credit card debt trap, percentage driven transactions will be the reasons why we will have newer payment rails and with it, newer payment instruments that will dethrone credit/debit cards.