This interview has been edited and condensed.
KM: What have you seen with mobile payments in the last year and what is coming down the line?
KP: It's an interesting and also a bit of a nerve-wracking time. Many people in our field are less interested in payments as a revenue line, and are more interested in keeping customers in their ecosystem. The players want to stay in payments because it's providing consumer convenience. A lot of these digital players want to augment their journey that they already have, to provide value.
Really what you need to do with payments, as a capital-intensive business, is have them make sense for all the parties involved and to build scale. Payments have to make sense for the person who is paying, and they have to make sense for the merchant or service provider. As an industry, we're also seeing a lot of interest in peer-to-peer platforms, helping to provide the scale our business needs.
When customers add up all their transactions – their coffee in the morning, their salad, dinner, cocktails, going out with their friends, a cute pair of shoes – they want that to be electronic. They want the management tools to control their finances and recognize that maybe they have a shoe problem. We think about enabling the broader finance ecosystem for the benefit of everyone involved. Everyone, both those providing payment services and customers, wants it to be safe, secure, and ubiquitous.
KM: What is the biggest weakness among the different parties involved and why?
KP: Providing digital card credentials, but not using card credentials at the actual point of sale. The consumer doesn't want to give anyone their account number, they just want the ability to pay. The industry is working on tokenization, and managing of credentials. Instead of providing them to be swiped by the merchant, provide the ability to pay for a one-time use, limited to that device, and to that geography. There's an amazing set of things we can do around that.
KM: Our previous research has found that trust is a big problem in getting more people to use mobile payments. What have you seen around that?
KP: We're having a fundamental shift in consumer behavior. A consumer may be familiar and trust a fax machine. And because they trust and are familiar with the fax machine they may feel comfortable writing down their credit card number and sending it to a caterer. It's known, but far less secure than your average mobile payment. Consumer behavior shifts. Fast is in a three-year time frame, slow is in the seven and potentially longer timeframe. Consider when the first iPhone was introduced and when my 70-year-old aunt had one — she just got one this past year — she's learning how to use this new thing. There hasn't been a lot of time between 2006 and 2016. Within 10 years you have a senior citizen using technology more powerful than the personal computers used, say, 20 years ago.
What we're looking to do with our partners, we don't go directly to our consumers. We go through our banks and other partners, and provide them with methods of secure payment for a broader and richer consumer journey.
Take a consumer with an issuing bank. They have a relationship with their bank. Putting mobile payment capability into their bank that they already use for their balances becomes an incredible value-add that is an extension of their trust with that financial institution. We're adding in convenience. When you think about the full consumer journey around the purchasing lifecycle, how do you want to drive that end-to-end experience?
Research has shown consumers are partial to the notion of financial control. How do you manage your spend in context of what credit limit you have available to spend? Consumers want this E-ZPass experience, but they want that moment where they can reflect and pull back if they need to. If they have that balance of safe, streamlined, super-fast experience, but they've got the control over it — that's been proven to us time and time again as really resonating with consumers.
KM: We found that the Starbucks mobile app was hugely successful and that rewards were a big part of that. How do you think that plays into mobile payments?
KP: Rewards are complicated. You need enough information to build in. There isn't a one size fits all. Different partners want to approach offers in different ways. The crux for the consumer is getting the personalization right. If I'm on Amazon and I make a one-time baby purchase, I don't want to then be bombarded based on episodic purchases. Get to know my preferences better. That's really where the magic is in offers.
KM: What do you see for the future of payments?
KP: The Internet of Things. The ability for every device to be a commerce device. The Ringly ring can provide notifications, it can also do secure electronic payments. There's another ring I have from Kerv on order. GM car key fobs already have them. We've had them sewn into designer dresses and bags. There's a flurry of interest in fashion overall.
Consumer choice and convenience will continue. If I was an investment banker in London wearing cuff links, I very well might want tap and pay with cuff links. For me, when I have a car key fob, when I've got my car with me, tapping and paying with my car key fob, that's a pretty great consumer experience. I think you're going to see a variety of devices. We're already in a luxury watch by Bulgari.
Payment capability is something people want in a multitude of form factors. You'll have a very prolonged consumer voting period to see where the preference is overall. The more we continue to make it convenient for consumers the more they'll continue to adopt.
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