Mobile phones disruption, acquiring business in trouble?

Jennifer Bailey, head of Apple Pay, has a job of work convincing people to try mobile payments. And while consumers aren’t entirely convinced, some acquirers can see the shoots of a mobile revolution. The head of an acquiring business in Europe told Lafferty News glumly last week that acquiring as we know it would not last more than ten years as a business model. The cause of this disruption? Mobile phones. It happening on an enormous scale in the East and seems inevitably headed to the west. Mobile payments have waxed and waned as operators and retailers try to strike the right balance. Internetretailer.com report that over half of the contactless terminals in the UK will now accept contactless payments from the iPhone for over £30, setting the phone apart from contactless cards that are limited to that amount. “According to Paul Lewis, Senior Director of Marketing at VoucherCodes.co.uk and RetailMeNot: ‘Apple Pay provides both retailers and consumers alike a fantastic opportunity in the high street —we already know when it comes to the consumer it’s all about convenience and ease of use and this is exactly what Apple Pay provides. And we know they’re embracing the technology.'”

Meanwhile, Bailey is hoping that Australian consumers will embrace Apple Pay with such fervour that they will change banks just to do so. “While the majority of Australians have yet to try mobile contactless payments…Jennifer Bailey said she was confident that Australian customers would change banks to access Apple Pay in February. However, considering over 70 percent of Australians aren’t interested in using digital wallets, her prediction hasn’t come true quite yet,” says finder.com.au. It seems that Australians, known to be early adopters of all things digital, just aren’t that pushed about mobile payments — yet. Finder.com.au suspects that it will take something big for Australians to make the switch — especially with all of the rewards and incentives already available through cards. A number of years ago we wrote about Adelaide and Bendigo’s QR-code driven local incentives programme. Will that level of local service and loyalty be within the grasp of a global giant?

But which card will win out — debit or credit? Lafferty research shows debit card usage soaring across the world. Credit card profitability is an order higher than that offered by debit cards, and credit cards on phones will need to offer some serious incentives due to higher fees, which consumers may start paying more attention to as more of their money goes digital. Payments UK, the trade association for the payments industry, says: “Rapid growth in the use of contactless cards means cash
will be overtaken as Britain’s most frequently used payment method by the end of 2018, according to [our] new report published today….This latest forecast still does not herald the demise of cash — even in ten years’ time it is still expected to make up 21 percent of all payments.”

The association predicts that debit cards will become the “most frequently used payment method in late 2018”, three years earlier than
previously predicted, due in large part to the increasing popularity of contactless.

Finally, Facebook and Google (read: Youtube) are spending a lot of cash to lobby European legislators. This graph from Transparency
International shows Google’s spend in Europe increasing from $1 million in 2014 up to more than $4 million this year. It’s not working. The FT reports today that new regulations will draw Facebook and Google into the same category as broadcasters, with similar requirements on policing content. This is a drawback for the US tech giants, which have skewed heavily towards video in recent years, putting streaming content and advertising at the centre of their strategies: “For the first time, the businesses would be legally obliged to come up with measures to ferret out videos that contain hate speech, incitement to terrorism or simply
harm the ‘moral development’ of children.” Facebook in particular has continually irritated legislators with its insistence that its users have the ability to police content and report inappropriate material.

However, it’s not escaped the notice of these same legislators that Facebook has continued to dodge notice that it has responsibilities as a publisher of content — much the same morass as led it to dismiss news editors last year and start re-hiring in greater numbers this year following the ‘fake news’ phenomenon.

Courtesy Ronan Lynch, Lafferty Briefing