The NFC World team has identified ten pressure points that suggest the arrival of mobile payments will result in a fundamental change in the overall cost of processing payments and the way in which merchants transaction fees are calculated — and we’d like to hear from anyone who is working on ways to use mobile technology to cut the cost of processing transactions at the point of sale.
“Mobile Wallet Adoption Drivers: Merchant Transaction Fees” is a new report that the NFC World team is working on for subscribers to The Mobile Wallet Report. So far, we have identified ten separate pressure points that, together, suggest that the arrival of mobile payments is set to significantly reduce the fees merchants have to pay to process transactions at the point of sale.
If you are working in any of these ten areas, on other ways to use mobile technology to make merchant transaction processing more efficient or would like to share your expertise and opinion, please get in touch — we’d love to hear from you and, as a thank-you for your contribution, we’ll send you a complimentary copy of the final report as soon as it is published.
The list of pressure points we have identified to date, and the questions we are looking to answer, are:
1. Merchant-led payments ventures
Is MCX in the US just the first of many merchant-led mobile wallet ventures that will be formed around the world? How will major merchants grouping together to bulk buy payments processing affect fee structures? Will merchant-owned payments systems prove to be the best way to minimize transaction fees? How will mobile payments affect closed loop store card usage and adoption rates?
2. New opportunities to reduce fraud
What emerging technologies hold most promise for cutting fraud rates? Biometrics? One time passwords (OTP)? Cloud-based profiling? EMV and NFC?
3. Savings in compliance and estate management costs
How can merchants use the move to mobile payments to cut the cost of complying with regulations like PCI DSS? How can they best adapt to being able to process a multitude of payments types, coupons and discount schemes at the point of sale? What options are available for introducing new types of point-of-sale hardware that offer a wide range of functionality while also reducing overall administration costs?
4. Pressure from government, regulatory and consumer advocacy groups
What impact will moves to protect the privacy of customer data and the move to “big data” have on merchant fees? How is the Durbin Amendment affecting costs today? What other regulatory initiatives are in the pipeline?
5. Hardware evolution
POS terminals are evolving rapidly. What does the point-of-sale terminal of the future look like? How will the availability of smartphone and tablet-based terminals affect hardware and overall processing costs?
6. Cross-subsidization of fees
How far will it be possible for merchants to offset the cost of processing transactions with income received from coupon and other incentive issuers seeking to close the redemption loop at the point of sale? Is 0% a practical fee target to be aiming for?
7. New pricing models
Will the concept of charging per transaction survive in a mobile payments world? Is a monthly “all you can eat” fee the way ahead? Will it be possible for merchants to surcharge, or offer discounts for, particular types of payment method and different groups of customers?
8. Venture-backed new entrants
In what way will the entry of well funded start-ups impact merchant fees? Will the fight to quickly gain market share lead to major incentives for merchants that sign up early for venture-backed entrants seeking to establish themselves as the new Square? Are major players moving into the sector, such as mobile network operators, the online giants and even merchants themselves, better placed to drive down fees? And will the entry of these new players lead, in turn, to the established payments networks having to cut their fees too?
9. Alternative payments rails
Where are the opportunities to bypass existing payments models to cut out the middleman and reduce costs? Can mobile payments at the point of sale be built on existing bank-to-bank payments methods like ACH? How much potential is there for new mechanisms to be built that instantly link the consumers’ bank account to the merchant’s at the point of sale?
10. New forms of money
Emerging electronic-only forms of money, like Bitcoin and Mintchip, as well as tokenized cash systems like Cardis hold the promise of replacing cash — and the lower cost of processing cash transactions — with equally low cost transaction fees for low value purchases made via mobile phones. What new forms of money are now emerging and how practical are they in reality for merchants to adopt?
We’re also investigating how different “last inch” payments solutions, such as NFC, EMV and QR codes, impact the overall cost for merchants. Are there cost cutting options that only NFC can deliver? How practical is it in reality for merchants to accept payments via QR codes at the point of sale? And how many are equipped today with the hardware to process this kind of transaction?
Who we want to hear from
We’d like input from anyone involved in the move to mobile payments at the point of sale, from the world’s largest companies to the smallest start-ups and from established financial services providers and merchants to inventors, disruptors, analysts and consultants.
We’d like to know about your new products and your experiences in testing out alternative services, how you see the future evolving and the lessons you have learned along the way.
It doesn’t matter where you operate as this study is global and, of course, there is no cost involved in taking part.
The final report will form part of NFC World’s business intelligence service, The Mobile Wallet Report, and will be sent to all subscribers as part of their subscription, as well as to everyone who contributes to the report. Our thanks in advance for your contribution!