Digital Transactions - November 2014 - (Page 30)
ISSUES IN E-PAYMENTS
With non-stop data breaches and the coming of EMV chip cards, virtual currency,
and mobile wallets, payments seemed to be all over the news in 2014. Here's our annual
review of the top issues in electronic payments. They all defy a soundbite solution.
BY JOHN STEWART, KEVIN WOODWARD, AND JIM DALY
HEADING TOWARD ITS CLOSE, 2014 SEEMED
TO BE THE YEAR OF THE DINOSAUR-
as in the outmoded creature whose days were ended in the
flash of a mighty asteroid strike.
Over and over again, the entities that clung to plastic
cards with mag stripes, to slow-mo settlement processes,
to old-fashioned price-based acquiring, seemed to be the
ones caught flat-footed by explosive trends like EMV and
mobile wallets, faster settlement, and cryptocurrencies.
Indeed, it was a year of asteroids as much as it was a year
The vulnerability of plastic cards was never more dramatically displayed than in 2014. With Target Corp.'s
massive payment card data breach making headlines
as the year opened and an even bigger one at Home
Depot revealed as autumn took hold-and with a steady
stream of smaller breaches in between-Americans were
constantly reminded of the insecurity of their magneticstripe credit and debit cards.
The breaches introduced millions to the acronym
"EMV," for Europay-MasterCard-Visa chip cards, and
alerted consumers to the fact that their familiar routines of
paying with plastic would be changing soon.
Virtual currencies were constantly in the news, too.
Mobile wallets, meanwhile, seemed to be languishing until
Apple Inc. unveiled Apple Pay. Withered hopes for the
mobile wallet suddenly revived, even though it's way too
soon to judge Apple Pay's performance.
The U.S. Department of Justice with its controversial
Operation Choke Point also grabbed headlines in the
mainstream media. Should government, in its quest to
thwart fraud on consumers, deputize processors to deny
access to electronic payment services to merchants the
authorities deem suspect? Critics claimed the feds want
to deny payments access to entire categories of ostensibly
legal but disfavored merchants.
U.S. Consumer Electronic Transactions
Source: Digital Transactions estimates
Payments executives are busying themselves with
many other issues too. Discussion of tokenization of sensitive card data ramped up during the conversations about
EMV and mobile wallets, but beyond technology is an
old issue: control. Who gets to call the shots on specs and
standards, and to what degree should the various tribes in
the payments nation cooperate on tokenization?
How to make automated clearing house payments
faster generated earnest debate at numerous industry conferences. Old-fashioned independent sales organizations
found their tried-and-true business model under threat
from a new breed of tech-oriented ISOs. Some merchant
processors also perceived that Amazon.com Inc., which
continues its expansion beyond the fringes of online
retailing, might undermine their traditional practices.
Electronic payments continue to grow, although last
year's transaction growth was ho-hum following a revvedup 2012. Digital Transactions estimates card, ACH, and
related payment transactions totaled 121.4 billion in 2013,
up 2% from 119 billion in 2012. The seven-year average
average annual rate of growth since 2006 is 5.71%.
What follows is the essence of the aforementioned
issues, and how payments executives are hunting for
substantive versus soundbite solutions.
November 2014 * digitaltransactions * 30
Table of Contents for the Digital Edition of Digital Transactions - November 2014
The Gimlet Eye: Don't Write off POS Terminals Just Yet
Trends & Tactiics
Acquiring: POS Terminals Have a Future, And It's Looking Good
Strategies: Behind the Acquirers' M&A Spree
Cover Story: The 10 Most Pressing Issues in E-Payments
Acquiring: Should They Stay Or Should They Go?
Digital Currency: Here Come the Bitcoin ATMs
Endpoint: Why It's Different With Apple Pay
Digital Transactions - November 2014