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onsumer payment for goods and services is being transformed by a fl urry of new, competing methods of payment across the globe, and mobile technology is at its heart.
In fact, mobile payments are likely to account for more than US$1 trillion of transactions worldwide by 2017.
Seeking to protect their payment revenues, the traditional fi nancial players have introduced apps for mobile payment. But competition from telcos, technology innovators, and even retailers themselves is fi erce. Google and a slew of tech start-ups (such as Square and Lifelock’s Lemon) are betting on virtual wallets, which store credit and bank cards, loyalty programs, and even digital coupons.
There are also non-bank-based money transfer services such as PayPal, created for online transactions and popularized by eBay which more than 1.9 million merchants in the US have committed to accepting.
The traditional fi nancial players have already introduced apps for mobile payment. But competition from telcos, technology innovators, even retailers themselves, is fi erce. Coffee giant, Starbucks, for example, uses a closed- loop payment app that generates more than four million mobile transactions in a typical week.
Then there are mobile wallets, which Google and a slew of tech start-ups (such as Square and LifeLock’s Lemon) favour. These store credit and bank cards, loyalty programmes and even digital coupons. A report last year by Allied Market Research predicted that the mobile wallet market would reach US$5,250bn worldwide by 2020.
PAYPAL, CREATED FOR ONLINE TRANSACTIONS AND POPULARIZED BY EBAY WHICH MORE THAN 1.9 MILLION MERCHANTS IN THE US HAVE COMMITTED TO ACCEPTING.
Another option is non-bank-based money transfer services, such as PayPal, which more than 1.9 million merchants in the US accept. Even cryptocurrencies – peer-to-peer virtual fi nancial systems, such as Bitcoin – could gain acceptance.
Traditional payments under fi re
Transformation of the payment system, however, is happening at different speeds in different countries. Debit and credit card use, for instance, is widespread in the UK and US. Yet those options have faced scrutiny from regulators, governments and large-scale retailers because of the fees issuers charge merchants.
Now the US Federal Reserve is advocating improvements in payment systems. As a result, some of America’s largest mass-market retailers have formed the Merchant Customer Exchange (MCX), to create “a customer- focused, versatile and integrated mobile commerce platform.”
“But regardless of what takes off in the long run”, says Chris Hadorn, Principal at KPMG in the US, “there is an opportunity for retailers to promote their own brand through the payment process, communicate the benefi ts of doing so and cultivate a better relationship with the consumer.”
FOCUS 30
© 2014 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member fi rm of the KPMG network of independent member fi rms affi liated with KPMG International Cooperative, a Swiss entity. All rights reserved.
REINVENTING MONEY
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