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03.01.16

Mobile, IoT, P2P Payments Will Rule the Future

grocery mobile imageBy Thad Rueter, Senior Editor

Be mobile, be fast and be ready for the demise of paper currency: Those are some of the themes discussed this week at the InComm Partner Alliance 2016 conference in Austin, Texas, which offers retailers, payments experts and other attendees a glimpse of the future.

The sessions, helmed by futurists and authors, offered more generalities than specific best practices. But they did paint a colorful picture of where retail is headed, and where payments likely will follow. “The challenge is no longer to sell things online but to get [goods] to consumers quickly,” said retail industry futurist Doug Stephens, who wrote the book Retail Revival: Reimagining Business for the New Age of Consumerism.

That means not only one-hour or less deliveries but automatic ordering—and payment—of such products as coffee, laundry soap and printer ink through Web-connected devices, a movement called the Internet of Things that’s being led in the U.S. by Amazon.com and, to a lesser extent, Google. He predicted that within a decade, 15 percent of retail purchases will stem from such automatic replenishment. And soon enough, he said, household 3-D printers will enable consumers to manufacture bespoke goods such as running shoes after purchasing licenses from brands. That change is happening as consumers continue to flood toward mobile: Within a year, 50 percent of all retail transactions will involve mobile in some way, Stephens added. That means payment providers and other fintech professionals will have to move fast to keep up with changing consumer behavior.

The concept of money also seems likely to change in the coming years, according to David Wolman, a reporter who wrote the book The End of Money and a self-described “crusader” for electronic transactions. That’s not only because coins cost more to produce than they are worth, or that paper money is filthy with germs and often used in criminal transactions or to avoid taxes. And it’s not only because of the rise of a digital currency such as bitcoin, he told attendees. While acknowledging that some consumers prefer the “physical experience of cash,” he foresees a near future—again, one in which retail is typically conducted via mobile—in which “consumers are going to expect to have a rainbow of currencies available to them.” For instance, a shopper spending $100 from a $200 gift card might want to get digital change not in U.S. currency but, say, airline miles (to help fund a vacation to Canada, for instance) or even in Canadian dollars (to use on that vacation).

A glimpse of such a future can be found by looking at the Venmo P2P service, through which at least $1 billion was transferred in January, more than 2.5 times as much as was was transferred in January 2015. Venmo, a PayPal company, has earned currency-like levels of trust from the millennial consumers, Wolman said, telling a story about how he pays his babysitter through the service.

The mobile payments future is not just happening in the U.S. To research his book, Wolman travelled to Delhi, India, where me met a dirt-poor merchant who used to deal in cash, hiding bills in a tea pot and risking theft when he bought a bus ticket each month to visit his rural relatives to give them a share of his earnings. Now, that same merchant uses a mobile wallet service, along with a low-cost savings account at a bank, to transfer that money to those relatives, reducing risk and the cost of travel. His relatives can take their own mobile phones to buy cooking gas and other goods, paying via the wallet and getting change back digitally or via physical currency. Such technology, Wolman said, will help millions of such merchants gain a larger foothold in India’s formal economy, and provide potential customers to payment service providers.

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