Have Payments Become A Disappearing Act?

The future of payments is as clear as disappearing ink. Ten years ago, no one could have foreseen the dizzying changes going on in the payments world of late – from rise of the super apps to paying with a smile at vending machines to checkout-free retail stores, especially in the East. In 2018, over 60 percent of payments on Alibaba’s Singles Day was done via biometrics. Separately, in the following year for the same event, one million orders were placed by consumers on the same platform via voice technology.

While global payments M&A went into a frenzy last year, as we wrote about in “March of the Pays” in November, the payments sector continues to forge ahead with the “big is better” trend heading into the new decade. For just the past few weeks into 2020, we have already seen two megadeals:

[1] Worldline agreed to buy rival Ingenico for 7.8 billion-euro (US $8.6 billion), creating the largest European payments company in a sector that is dominated by US-based giants. The combined entity would rank 4th largest in the world, providing payment services to one million merchants and 1,200 financial institutions worldwide. Worldline is a French financial services company that provides everything from in-store point-of-sale terminals to online payments, data analytics, banking and fraud protection; Ingenico, also French, is a large point-of-sale terminal provider that controls 37 percent of the market globally.

[2] In January, Visa struck a $5.3 million deal to buy Plaid, a fintech company that enables fintech apps to connect to consumer financial accounts. Much has been speculated on the reasons for the deal, including Bradley’s take here on American Banker, and Ron Shevlin’s take on Forbes.

What is happening with the payment’s industry?

While economies of scale is certainly crucial in digital payments, we suspect part of the action might have been driven out of fear of the big tech, as demonstrated by the growing dominance of players such as Apple Pay and convergence is payments and mobile commerce.

As each region embraces ubiquitous and embedded payments through superapps, QR codes, NFC, wearables, and voice, the rise of card-not-present and card-on-file payments only increases.

What challenges and opportunities lie ahead for the payment ecosystem? What is the future of cards versus cashless? While digital payment is convenient – it is also painless. And with the growing popularity of ‘buy now pay later’ features, one must wonder – what happens when invisible spending gets out of control? What is the price we are willing to pay for convenience and mindless consumerism?

Be it unlikely bedfellows or close rivals, we will for sure see more acquisitions in the very near future. After all, as Heraclitus, a Greek philosopher, said: “Change is the only constant in life.”

Learn more about where payments are headed in this week’s episode of One Vision via iTunes and Spotify, where Theo and Bradley talk to Michele Tivey, Co-Founder and CEO at Payometry.

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