By John Stewart
The future of checkout, the role of the big payments networks, and merchants’ card-acceptance costs preoccupied a panel of mobile-payments executives assembled Tuesday to assess the current state and near-term future of the still-developing payment technology.
With respect to how in-store users should check out on their smart phones, the panel represented a mix of technologies from near-field communication to quick-response codes. But while experts have predicted an ultimate industry coalescence around the powerful NFC technology, some of the panelists weren’t so sure, and argued for a flexible approach that will suit merchants’ needs.
“People say, oh, it’s a QR code, but guess what, it’s working,” said Souheil Badran, president and general manager for Alipay North America. Alipay, a unit of China-based Ant Financial Services Group, has been establishing a North American merchant base for Chinese business travelers and tourists.
Others on the panel, citing the example of the Uber ride-sharing app, predicted the question of checkout technology will soon evaporate along with the checkout experience itself as payment processing moves from the point of sale to the cloud after items have been rung up. Some see this already starting to happen. “The definition of checkout is starting to fray very much,” said Spencer Spinnell, director of emerging platforms at Google, a unit of Alphabet Inc., sponsor of the Android Pay mobile wallet.
The panelists, who spoke at the conclusion of the Shoptalk retail-technology conference in Las Vegas, generally praised the big payments networks like Visa Inc. and Mastercard Inc. for introducing tokenization engines to mask card credentials and better secure mobile transactions. “That’s quite helped,” noted Spinnell. But they also hinted at some uneasiness toward the networks.
The biggest concern has to do with a perception that the networks tend toward closed and proprietary systems rather than open systems. This can hamper consolidation of data within a merchant’s system across card-payment brands, some of the panelists complained. “You have to make sure it’s an open system,” said Badran. “It’s the age of collaboration.”
And while the networks’ operating regulations prove helpful, the networks’ approach to these rules, too, can prove to be an obstacle, the panelists said. “The biggest thing the networks have contributed is the operating regulations, but it’s also the biggest obstacle,” said Patrick Gauthier, vice president of Amazon.com Inc.’s Amazon Pay service. “We’re in markets where you need technical interoperability, where you need to simplify.” He particularly criticized what he sees as a closed approach to rules governance. “There’s such a missed opportunity,” he said, “to get where we want. The governance tends be very closed.”
Merchants’ acceptance costs, which are largely determined by network interchange pricing, also came in for some criticism. Mobile transactions, the panelists pointed out, are highly secure, yet in some cases incur card-not-present pricing, which the networks set at a higher rate to account for increased risk.
“You no longer have a clear alignment between the true risk of a transaction and the price of a transaction,” said Gauthier. Tokenized payments through a smart phone, added Google’s Spinnell, are “incredibly secure, more secure than a chip card in your wallet. Everybody should be shaking the trees on that point.”
But not all the panelists agreed that acceptance cost is a proper focus for mobile-payments providers. While conceding mobile executives should be sympathetic to merchants’ cost burden, Samsung Pay Inc. vice president and general manager Sang W. Ahn argued there’s a more important priority. “We need higher conversions on mobile,” he said, referring to the rate at which users complete a transaction. “That’s a huge problem. On fee reductions, we’re there to help, but I don’t think it’s the right focus.”