Payments and mobile technology in European countries have always been ahead of the American marketplace. I am not sure when the concept started that the US is much better known for adopting technologies early on: stateside mobile networks tend to be about ten years behind the ones from Europe – and their transaction methods also lag the ones from the “Old World” with a decade, too.
US community still seems to be largely cash-based. Compare that with European countries, where today, 6 of 7 transactions are made utilizing a card. But the difference will go even more profound. The technocrat government of Italy, particularly, has declared a battle with cash: Prime Minister Mario Monti wants the nation’s vast army of sole proprietor entrepreneurs, including landlords, plumbers, electricians, and small businesses, to prevent making large transactions within the cash, which
critics state facilitates tax forestalling. On 4 December 2011, the Italian government decreased the maximum limit for dollars payment from 2 700 euros to 1 000 €. The rationale for this reduced limitation on cash movements is that Italy desperately needs to enhance its tax revenues. It views its anti-cash procedures as a means of cracking on tax evasion, which “costs” the government an estimated €150 thousand annually. However, with an eye-watering €1. 9 trillion involving public debt to their name, some commentators have defined this kind of punitive measure while “too little too late.”
Against the backdrop of a standard tendency towards the “cashless society,” the recent announcement by simply American Express that they have only released their roadmap intended for Europay MasterCard Visa (EMV) got me thinking about the point out of the payments environment and also this technology could produce in the coming months along with years.
Now, let me remain my neck out along with saying that I, for one, don’t think the US needs to have made the switch up to EMV since it has been employed in Europe for the past six a number of the technology itself rapidly at over ten years outdated – is well prior its sell-by date. It will have made much more sense to the US to bypass EMV altogether and move straight away to the near-field communication (NFC), which allows consumers to make electronic digital payments by simply waving their NFC-enabled phone near some payments terminal. Yes, EMV has security benefits and has helped substantially minimize fraudulent transactions throughout The European Union, but this should have been clear to the US retailers and federal authorities six years back. Why wait until now, whenever more flexible and innovative technology has superseded it?
One saving grace is that at least this particular switchover will force retailers to upgrade their définitif. Each of these upgraded system gadgets will also accept NFC as well as mobile transactions, which is an excellent opportunity for companies operating in this particular space, especially startups as well as smaller, independent companies who else (unlike the credit card giants) do not have the funds or even capacity to influence terminal as well as Point of Sale (POS) technology or upgrades.
But not all mobile / NFC payments technology is hassle-free. PayPass, for example, and other card networks for mobile and micropayments, charge retailers 0. 15% plus zero. 025 Euro in interchange every time a transaction is made. These types of figures are from the hottest Visa report. This means that the merchant is not making a profit for anyone buying relatively low-value merchandise, such as a 2 Euro ice cream. These more significant costs may force small business owners to raise prices or deal with squeezed margins because they cannot compete with larger suppliers who enjoy more excellent companies of scale (The Western European situation could also be affected by the particular recent $7. Twenty-five million settlement by Visa and MasterCard of class actions brought by retailers in the US above interchange fees. )
From your merchant’s point of view, it makes sense to be able to bypass the credit card sites entirely and go with the particular closed-loop solution. The market provides woken up to this fact together with every tech company and also startup offering some portable wallet or mobile repayment solution. You can now buy a spine with your Starbucks app and use your PayPal account in selected stores. But here is the irony: all this cashless technological innovation is supposed to make life less complicated – except it’s not!
Out of view of the public, the situation is even more complicated, with the reliance on systems such as those of the Trustworthy Service Manager (TSM) and also over-the-air personalization. When NFC handsets go mainstream and are no longer a need for cheap at all, that is the moment when you will genuinely be in often the era of mobile installments. But at present, TSM is likewise in a state of débordement. Mobile networks are going to be the leading players. Actually, will Vodafone, Three, Orange (3 of the leading UK operators), and the others be more bendable than the credit card companies, who at this time control the scene?
The system will still use the creditors’ infrastructure, so interchange is still an issue. It will take a lot of tricky bargaining, regulation, and working out standards the critical industry members can all concur with. No one can say for sure how the situation will pan available – or how small players are going to get access to often the chips that are vital to get mobile payments to become regular.
Consumers are voting using smartphones: there is increasing requirement and enthusiasm for making cell phone payments more widespread and easier. Retailers – mainly smaller, independent ones- could benefit, and perhaps government revenue-collecting agencies’ health systems would welcome the release and greater use of this technology (with concerns above privacy being taken seriously, regarding course). There is also an immediate need for the business itself, buy and sell and consumer bodies, and also national governments and the EUROPEAN to co-ordinate their attempts to ensure that the consumer has a range of easily accessible, safe, and successful payment methods to choose from. And also, of course, there needs to be an amount playing field for innovative, imaginative startups such as Waspit to produce services that give consumers the flexibility and freedom that this groundbreaking technology could bring to householder’s lives.
Links to stats:
Research and Markets: Cash Versus Cards: this report provides research on key nations’ cards and obligations systems worldwide. The relevant statistics for the Western European market can be found in the suite. As well as chapter 4. Battle with Cash in Italy.