Who's Got the Money? - Visa, Mastercard, AT&T, Verizon, Discover, Paypal
- By 2015 or 2020 cash, checks, debit and credit cards could disappear
- Smartphones are positioned to eliminate old financial transaction tools, as well as land line phone service and PCs
- All businesses will have to make changes to deal with new forms of payment processing, and early adopters will likely gain an advantage with customes
- There will likely be some big winners and big losers from this transition
Can you imagine a world with no cash? It could happen soon, and how will it affect your business?
Bloomberg.com headlined "AT&T, Verizon to Target Visa, Mastercard with Smartphones." The business idea is to replace your Visa and Mastercard with a smartphone app that acts as your debit and/or credit card. Doing this makes it faster and easier for smartphone users to place transactions - online or in person - without even bothering with a card or any other physical artifact.
This is a big deal, because according to Mediapost.com "Smartphones Nearly 20% of All Phones Sold." So smartphones are starting to be everywhere, and at current rates will replace old mobile phones in just a couple of years. They are increasingly replacing traditional land-line service as headlined in DailyMarkets.com, "Cell Phone Only Use Hits New High of 24.5% in U.S." People are abandoning the historical land-line telephone.
The traditional "phone company" and its services are rapidly disappearing. After all the effort Southwestern Bell put in to recreating the old "ma bell" of AT&T, it now looks like that entire business is in decline and likely to become about as common as CB or portable AM radios. What is the future of AT&T and Verizon if they front-end Discover as the payment processor? Will these companies transition to become something very different than their past, and if so what will that be? Or will they be an early proponent for change but let the business value go to others - as they did in mobile phones, ISDN and other internet connectivity as well as cable entertainment?
Mediapost.com also reports "PayPal Making Micropayments a Reality." Which gives us the last piece of the puzzle to just about guarantee old payment methods are likely to be gone by 2020 (possibly earlier - 2015?). People are giving up old land-line telecom for mobile, and mobile is rapidly becoming all smartphones. Smartphones are getting apps allowing them to conduct financial transactions without the need of a credit card, debit card or (going ultra low-tech) check (no printer needed - lol - which has to be a concern for companies like Zebra that make the printers). In fact, you can even make all kinds of payments, even really small ones under $1 - not just big ones - using your cell phone by opening a Paypal account. What you can easily see is a future where you don't need a wallet at all. Everything you'll need for financial transactions will be on your smartphone. (How much you want to bet somebody will figure out how to put your driver's license on the smartphone too?)
Ultra convenient, don't you think? You won't need a credit card, or any other card. You won't need a PC to do your on-line banking. You won't need cash for small purchases - you can even do garage sale transactions or buy gum using your smartphone. And there's sure to be an app that will consolidate all your payments and set up to automatically do transactions (like your mortgage or car lease) without you even having to do anything. And all from your smartphone. No more wallet, no more PC, no more coins or bills in your pocket.
So, what happens to cash registers, and the folks that make them? No registers in restaurants or hotels? What happens to desk clerks in hotels - will they be necessary? What about cashiers in retail stores - any need? Will banks have any need for a local branch? Why would ATMs exist? Quite literally a raft of companies would be affected that deal in the handling of transactions - from Visa and Mastercard to IBM and Diebold. Even those little printers in cabs could disappear as your phone now pays the cabbie directly what the meter requires. You could even pay modern parking meters with your smartphone!! What happens to companies that make mens and women's wallets? Will purses and clutches disappear from style? How much easier will it be for the IRS to track the income of people that have historically been in cash jobs?
Do your scenarios of 2015 include this kind of change in payments? Should it? What will be the impact on your bank? On your credit card supplier? Will your customers want to change how they pay? How will you need to change your order-to-cash process? Are you ready to be an early adopter, thus aiding revenue generation? Or will you let others steal sales by moving quickly to these modern payment systems?
There's precious little that's more important in business than collecting the money. A new set of technologies are sure to be changing how that happens. Will you leverage this to your advantage, or will your competitors?