FinTech’s approach to Payments
Advances in the way we carry out payments represents the birthplace of FinTech. From the first credit card transactions carried out by Diners in the 1950’s there has been progression in the way we make payments. This means that the landscape for payments is a varied mix of new and old as well as large incumbents and tiny startups. It is also a hotbed of acquisitions and mergers. New approaches to payments are wide spread and have been the focus of banks and credit card companies for a long time. We have come a long way from the carbon copy credit card ‘machines’ some might remember from the early days. Driven by reducing fraud, credit card companies have been leading the charge in new payment technology to make sure the efficiency of the payment is as high as it can be. The first real disruptor in this industry was PayPal. Established as a money transfer service it was quickly acquired by eBay and gained significant traction as a secure online payments gateway.
The increasing acceptance of making transactions online has lead to an ever increasing number of new ways for merchants to accept payments. The competition is fierce as each new entrant tries to balance the cost of creating a secure environment with ease of use, speed of transaction and number of features. With each new ‘Payment Gateway’ incarnation we move closer to a secure, feature filled, low cost, real time transaction. Many of these online ‘Payment Gateways’ have now branched out into providing the bricks and mortar merchant with a viable alternative to using a bank. Leading the charge is Square and PayPal. By adding a small card reader to your mobile phone you can accept card payments anywhere you can get phone reception. Add a ‘tablet’ and a cash register and you have a Point of Sale System at a fraction of the traditional cost.
New ways to identify the account holder for payment is another fast paced race that is being run. Whether we use our voice, our fingerprint, a mixture of biometric stages or simply how we look to the cashier are all potential winners in this space. Regardless of who wins out it is certain there is going to be a fractured market for many years to come. Whether you want to buy a coffee at the corner store or transfer funds to a friend, it is certain you will all have to be on a cooperative system for some time yet and Visa, MasterCard and Amex are going to be a significant part of this market for the foreseeable future.