Bill Hanifin
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You can read all you want about emerging forms of payment, mobile payment and loyalty schemes, and even attend conferences to listen to the experts offer opinions on how the future will take shape. On that note, don’t miss the conference report we published yesterday from the Mobile Banking Conference Summit.
But all of this listening and learning pales to having the “new world” land in your inbox. That’s what happened to me over the weekend. First, I received a well constructed email from Jos. A. Bank, the men’s clothing retailer advising me that I could now pay with PayPal in their stores. All I needed to do was to activate in-store checkout on my account and download the mobile Pay Pal app to my Android or iPhone.
A day later, I received an email from Pay Pal offering me a chance to “power up” my account with a line of credit from Bill Me Later® (available on purchases of $99 or more). Though I could lean on the credit line of a traditional credit card linked to my Pay Pal account for similar credit, it was clear that Pay Pal was attempting to position itself as a one stop shop for my online and offline shopping, supporting me on purchases with credit if needed.
While my inbox was filling up with Pay Pal news and offers, I was also taking note of weighty changes in the relationship between merchants and the major card processing networks, Visa, Mastercard, and American Express. Elements of a possible settlement of long-standing litigation brought by retailers against the card networks could include the wiping away of no-surcharge agreements for use of credit cards at merchant locations. In plain English, this means that merchants (any local retailer) could impose a surcharge on your purchase if you choose to pay with a credit card, representing a much sought after victory by merchants to reduce their cost of payment card acceptance.
The major networks have not been sitting on the sidelines, nor will they give up territory to Pay Pal and other alternate payment networks easily. In May, Visa announced it was increasing its “no signature” limit at point-of-sale to $50 up from $25 when the idea of “swipe and walk” was originally introduced. That change adds convenience for shoppers paying with a Visa card.
The battle for payment domination at point-of-sale was won by the big networks about 10-15 years ago and since then, the competitive map included only each other. Now, Pay Pal and others are contending for consumer preference at point-of-sale.
If you’re seeking to understand the degree of difficulty that Pay Pal and others have in their quest to challenge the big networks, think of something called “payment acceptance network”. Today, Visa and Mastercard have one, Pay Pal does not. I walked into Jos. A. Bank over the weekend as they had a big sale underway. When I asked if they were accepting Pay Pal to complete my purchase, the answer was “we’ve got those materials in the back and haven’t figured it out yet”.
There are many moving parts at work to determine the winners of the Battle for payment at point-of-sale, and establishing a reliable and well penetrated acceptance network should be highest on the list of the up and comers like Pay Pal.
