Predictions for 2012 – a contrarian view
January is traditionally a time for revisiting the stories of the year just past and speculating about the year ahead. So, sticking my neck out, and extrapolating from previous Bulletin Opinion articles, here’s my predictions for 2012:
- Contrary to received wisdom, 2012, like 2011 and 2010 before it, will not be the year when mobile NFC payment takes off. There will not be enough contactless terminals (see next) and the business case will remain elusive. People will start to realise that making money out of low value payments is difficult enough already without sharing the profits across two or three new stakeholders.
- Contactless payment volumes, whether via mobile phone or card, will continue to be disappointing. In the UK, the London Olympics may generate some renewed interest but mainstream retailers will continue to question the business case for installing contactless terminals and consumers will increasingly use standard, contact, chip and PIN debit cards for low value payments. By my calculations, a doubling of contactless payment volumes will still amount to less than 0.1% of total card payment volumes!
- As distinct from mobile NFC, other forms of mobile payments, using a mobile phone instead of a PC for mobile banking, mobile commerce, and mobile person-to-person payments, will all grow steadily. This will prompt fraudsters to challenge the security of mobile phones with spyware and phishing attacks.
- Mobile phones will also start to be used by small merchants and tradespeople as low cost terminals for accepting card payments. This will cause many to ask whether cheques shouldn’t be phased out in the UK!
- The UK banks will finally start developing commercial products on top of Faster Payments, including a person-to-person payment service enabling customers to send money to others directly from their bank account using just an email address or phone number.
- Faster Payments will also be used to start developing a UK version of the Dutch iDeal online shopping service.
- The card schemes will respond by promoting Display Cards as a convenient means of generating dynamic 3D Secure passwords for authenticating card-not-present payments.
- In the US, everyone will agree by the end of 2012 that migration to EMV chip is inevitable, but progress will be slow in the absence of any central coordinating body.
- Still in the US, the failure of merchants to pass on the savings from lower interchange rates to consumers will end up with the repeal of the Durbin Amendment.
- Proprietary, closed-loop smartcard schemes worldwide will increasingly be replaced by open-loop multi-function EMV chip card solutions in areas such as transit, education, health, and central and local government.
- And finally, someone, somewhere will resurrect the idea of a universal, low-cost, pre-authorised debit e-purse card for low value payments, with most cost elements stripped out: no cardholder verification, no receipts, no chargebacks, and aggregated statements.
Remember, you heard it here first!
Banking Automation Bulletin Opinion Article January 2012, by Nick Collin