March of the Big Tech Payments in 2019

2019 has been a whirlwind year for payments and the big tech community. Multiple mega deals were made, including the acquisition of Worldpay by FIS, buyout of TSYS by Global Payments, and Fiserv’s acquisition of First Data. Most recently, German-based Wirecard has agreed to acquire AllScore Payment Services, a Chinese payments group, for up to €109 million, following the footsteps of PayPal’s purchase of Gopay Information Technology, another Chinese payments group.

Interesting times for Big Tech Payments in 2019

Unicorn deals aside, unlikely alliances between strange bedfellows have also been forged. Take the example of Marcus, a digital outpost of the Wall Street titan Goldman Sachs, and Apple, the highest valued tech company in the world (as of November 2019). The launch of the Apple Card created much excitement for some – especially in light of Apple’s reputation for delivering exceptional customer experience. While a physical credit card is still a traditional product, it has the potential to drive more usage towards Apple Pay, which has surpassed Starbucks e-wallet this year in transaction volume.

And Apple was hardly the only tech company launching a payment card. Additional entrants include Betterment, Stash, and Uber, all launched leveraging Green Dot; and Chime and PayPal, both launched using Bancorp as the partner bank.

And while we are still busy with plastics in the U.S., and finally enjoying the convenience of contactless payments, China has leapfrogged the world with their e-wallets ecosystem. In the last Singles Day (November 11, 2018), Alibaba reported US$30 billion in online sales, with 60 percent of transactions being paid via biometrics or customer snapping a selfie. This year, they topped it once again with US$38.4 billion in sales. All across Asia, big technology giants, such as Alibaba and Tencent in China, Grab and Go Jek in Southeast Asia, and Line in Japan and Korean, super apps play an increasingly dominant role in consumers’ lives beyond payments to other banking services.

According to Juniper Research, by the end of this year, 2.1 million consumers worldwide will be using e-wallet to transact; and more than two-thirds of these users live in APAC, driven by high smartphone adoption. Will we see the West copying the trend from the East? The case of Uber Pay is certainly an interesting case to watch. According to Capgemini’s World Payment Report 2019, 38% of banks are planning an anchor role within new payments ecosystems; and 63% of banks say BigTech business models leveraging banks’ infrastructure re a leading threat.

Perhaps it is not surprising that JP Morgan Chase are pre-empting the potential loss in payments revenue by building an e-wallet that enables ecommerce and gig economy firms offer virtual bank accounts for their customers.   

Cross border influence also plays a factor in the adoption of new technologies. While cash is still a popular payment method in quite a few developed economies such as the UK and the US, the large number of Chinese tourists traveling abroad, who are used to paying via QR code using WeChat Pay and Alipay, has prompted the extension of these popular Chinese payment services outside of China. Conversely, Alipay has just announced their new product feature, that allows foreigners without Chinese bank account to use their services in China, which is quickly transforming into a cashless society.

Another trend to note is voice payments. At the recent Money20/20 event in Las Vegas, Amazon announced their partnership with Paymentus to enable bill inquiries via Alexa-enabled devices. While this stops short of enabling bill payments through these devices, and we still have a few hurdles to cross, namely consumers’ concerns around privacy, voice payment is definitely an emerging trend to watch in the near future.

The surge of mobile payments, continued proliferation of mobile devices, and change in consumer behavior will continue to drive frictionless payments going forward.

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Tune in to our new episode of “The Other 50” via iTunes and Spotify, where Theo and Brad chatted with Stephanie Foster, otherwise known as @payments_geek, on payment trends, digital adoption, and social responsibilities.

See more articles by Theo here.