Venture Capitalists invested $2 billion in emerging payment technologies between January 2013 and July 2014 – but for card companies, this is a good thing.
While mobile wallets and other digital forms of payment are growing in popularity, most of these link back to Visa, MasterCard and other well-established card giants, strengthening, rather than weakening, their market share.
New technologies such as Apple Pay and Loop Pay, for example, tend to piggy back on existing systems that have been developed for card payments. As Will Wang Graylin, CEO of LoopPay, told the MIT Technology Review: “Think about the infrastructure and how long it took to create that… It’s very difficult to change merchant behaviour.”
What’s more, these proliferating payment technologies encourage customers to see digital payments as the norm, which can indirectly promote card payments. In tech-savvy countries such as Singapore and the Netherlands, non-cash payments make up over 60% of all transactions.
For most of the world, cash is still king and a combination of security fears and deep-rooted cultural behaviours mean that mobile, online and even card payments have a long way to go before they become the norm. In Saudia Arabia and India, for example, cash accounts for 99% and 98% of all payments, respectively. That said, in many developing countries, especially in Sub-Saharan Africa, consumers are jumping straight from hard currency to mobile and online, leaving out ATMs and credit cards altogether. Far from being competitors, disruptive payment technologies in these nations present the best possible growth opportunities for traditional card providers.
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