A MIRACLE OF OLYMPIC PROPORTIONS, PAYMENT DISRUPTION

Lake Placid. 1980.  “11 seconds, you’ve got 10 seconds, the countdown going on right now! Morrow, up to Silk. Five seconds left in the game. Do you believe in miracles?! YES!!!” Al Michaels’ immortal words as the US Men’s Hockey finished the miracle win over the Soviets.

ABC anchor Jim McKay likened the win to a bunch of rag tag college players beating the Pittsburgh Steelers (the dominant football team at the time).

I’m pretty sure the odds for the ’80 hockey team were actually BETTER than shifting consumer behavior of payment with an antiquated plastic card. I’m sure aliens watching us are thinking, “They can fly to space and can mess around with atoms, but they still pass around that plastic thingy to buy stuff?”

However, it feels like a storm may be brewing. Dare I say a perfect storm? Let’s take a look at these merging weather systems of disruption.

Consumer demand and probable acceptance: Let’s face it: consumers are about as excited about retail data breaches as they are at the prospect of a tax season that lasts all year. And if you’re a celebrity, well…you’re probably more concerned than ever with your public… um… assets as of late. Consumers want to feel secure and right now they’re not getting that vibe.  So, I bet they would be willing to try something new to be rid of the old. The combination of factors arriving in Apple Pay are exciting in that they will be leveraging the token system (unique card number and security code for each transaction) combined with fingerprint touch ID from the iPhone 6 and iPhone 6 Plus. Consumers will also receive a true “one-touch” payment solution for offline, online and mobile that requires no exchanging of permanent data that is integrated directly into their phone. This mitigates consumer risk greatly from the traditional credit card handoff. Consumers will need to be educated a bit here to understand the differences and mitigation of risk. There is nothing quite like Apple jumping into a market to create the requisite awareness.

Mobile is ready to heed the call: Marketers have seen mobile traffic surge over the last couple of years. While mobile revenue growth has been surging alongside traffic, it still lags traffic as a share of the total. Buying a product via mobile still carries a lot of friction in the payment process. However, what if adoption of comprehensive solutions like Apple Pay and Google Wallet enable a “buy in the moment” behavior not yet seen in mobile commerce? To really blow your mind, what if this actually creates more spending than seen over desktop due to the immediacy and excitement of being in the moment coupled with a payment process with even less friction than one-click payment on the desktop? Mind. Blown.

Retailers are ready: Many large-scale merchants are already trying to get ahead of the opportunity by creating the Merchant Customer Exchange.  If you’ve been in an Apple Store or any other shop leveraging beacons, this would be a big boost to your optimism about mobile payment. The proactivity potential of the technology is impressive and could be an asset to defend against or take advantage of show rooming. For example, imagine a customer is in the game console section at a Best Buy. Best Buy recognizes this and does a quick scan of today’s prices online for an Xbox. They find the lowest price and proactively message the consumer that they qualify for the “lowest price” guarantee if they buy in-store (while they are conveniently standing at a Xbox. Then the consumer can scan the item and pay via Apple Pay, Google Wallet, or CurrentC (the MCX smartphone app).  No credit card and a significantly reduced fraud risk for both the retailer and the consumer. Not only a seamless buying process, Best Buy also just created an endearing “personal shopper” experience in-store.  NFC (Near Field Communication) is a factor to adoption here, but again, nothing like Apple jumping into a market to create the requisite awareness (and drive adoption).  THE CROWD GOES WILD!

The Finance Industry is on board: The finance industry has had a rough go since 2008, especially in the eyes of Main Street, USA.  However, they can look like superheroes here, all while improving their business. Every time there is a data breach, banks and credit card issuers need to spend $5-$10 for every replacement card they send out. This is in addition to the processing and other fees associated with fraudulent transactions. The token service built into these platforms, coupled with additional verification, such as fingerprint ID, should greatly reduce their risk. They also retain their value proposition as the “money house” and for determining and managing consumer credit worthiness. Boom. Seeing a big promotion for Apple Pay on my bank’s mobile app makes me realize they see the value in this. Mostly because their updates are few and far between…so anything new in the app is a big deal.

While 2015 may not be the true year of payment disruption, we may already be seeing formative signs. I also think the opportunity that exists for disrupted verticals like retail and travel to fight back and regain their loyal and semi-loyal consumers is huge!

Now, get ready to go impress the aliens. And, go watch “Miracle” to get pumped for the start of hockey season.  Go Kings!