TAMPA, Fla.—Get ready for consumer use of P2P to take off this year, but don’t expect wearables to gain much traction.
Tom Davis, CSCU’s senior vice president of finance and technology, and Lou Grilli, director of payments strategy, shared their payments forecast with CUToday.info.
In this, the second part of a two-part series, Davis and Grilli offer their thoughts on what credit unions should be preparing for. The first part of this series can be found here.
One Of The Big Tech Companies Will Become A Bank.
“Google has the Google Wallet, a stored-value account which can be used for P2P payments the same as PayPal, which in addition to P2P is primarily a way to pay online merchants,” said Grilli. “Samsung’s subsidiary, Samsung Capital, is the largest credit card issuer in Korea. Facebook Messenger enables payments.”
Prediction: “2017 will see one or more of the tech giants—Apple, Google, Samsung, Microsoft, Facebook, Amazon, Sony—move much more deeply into the banking space, most likely by buying a bank or one of the card networks,” said Grilli. “This would move the tech company a major step closer to establishing a new payment rail controlled by the company, for the purpose of owning the purchasing habits data.”
CU implications: “This is a far-reaching prediction with less likelihood of really happening,” said Grilli. “But if it were to happen, the most tech savvy members would be the first to try out the new ‘bank.’” `
Lou Grilli
2017 Will Be The Year Of P2P
The ability to pay family and friends is still “bogged down” in cash and checks, “except for Millennials who have already found the simplicity and beauty of the Venmo app,” said Grilli. “Splitting vacation expenses and group ticket purchases will become much easier when Early Warning’s Zelle Network reaches the market.”
Prediction: Credit unions offering P2P solutions will benefit from the press and the uptake in P2P payments driven by Zelle.
CU implications: “Once the Zelle app launches, be ready to market the ease and security of using an app instead of writing checks—which are more costly for a credit union to process,” said Grilli.
Internet Of Things And Connected Devices Will Continue To Make Lives Easier
Conversation surrounding the Internet of things (IoT) and payments was buoyed tremendously with the release of Samsung’s connected refrigerator at the Consumer Electronics Show in 2016, said Davis, noting that 2016 saw other applications released, such as the smart Brita water filter and the smart pool pump.
Tom Davis
“These devices can automatically reorder supplies and therefore can initiate payments on a consumer’s behalf,” said Davis. “It didn’t take long for the fraud watchdogs in the payments industry to weigh in about the potential risks these devices could bring to the ecosystem. Nevertheless, the devices continue to be developed to help make our lives easier and, for merchants, increase sales.”
Prediction: “I expect in 2017 to see more development in this area, but no significant change in the way payments work or increased sales volumes—for now—with these devices,” said Davis. “These transactions are primarily card on file transactions, which we have been accustomed to for quite some time.”
CU implications: “I have the same security concerns with these purchases as I do with purchases made via personal assistants and through checkout-less shopping.”
Wearables Will Continue To Struggle As A Payment Device
The ability to pay using a ring or article of clothing has been a draw at trade shows and events. But given that no one goes anywhere without their phone, and that wearables can’t match the processing power or communications capability of the phone, wearables will continue to struggle as a payment vehicle, said Davis.
Prediction: “I expect little to no growth in payment volume in wearables in 2017,” said Davis.
CU implications: Be leery of investment in this area.