Oxman: The ‘Tech-ification’ of Payments Grows
By Jason Oxman, CEO, Electronic Transactions Association
In early September 2014, Chief Executive Officer Tim Cook announced that Apple, one of the most innovative consumer electronics companies in the world, was launching a payments product. Apple Pay was not the first mobile wallet, or contactless payments solution, to come to market. Nor was it the last – Samsung Pay and Google Pay each unveiled mobile wallet innovations the following year. The introduction of these mobile wallets is an early example of what I believe is one of the most important trends that is defining our industry – the “tech-ification” of payments.
It’s easy to wax poetic about Silicon Valley giants, mobile wallets and smartphones, but the effect is tangible. Software and hardware revolutions – whether it’s from technology companies, a payments processor, or a fintech startup – have evolved payments from a single product (plastic card, magnetic stripe acceptance) to an innovation revolution.
Take the point-of-sale (POS) device as an example. Long the conduit through which transactions flow, the terminals of today are high-tech instruments compared to those of the past. Merchants expect these devices to deliver them powerful data at an affordable price, and they are increasingly interested in adding them to their countertops. ETA’s Payments Trends to Watch report projects that merchants will spend $1.7 billion on these devices in each of the next two years. And for the software that powers them, merchants will spend $2.2 billion this year, and $2.4 billion next year alone.
These sophisticated solutions, driven to market in many cases by forward-thinking acquirers, processors and ISOs, save merchants substantial time and money. According to data from Visa, modern digital payments acceptance costs 57 percent less than other payment types like cash and check for small and medium-sized businesses. They’ve also inspired a wave of industry partnerships and acquisitions – over 100 deals totaling $40 billion so far this year.
This industry shift towards tech-driven hardware and software products has shaped ETA as an organization. Since 2014, ETA has expanded its membership to include a wide array of innovative companies, including payment facilitators (PFs), independent software vendors (ISVs), value-added resellers (VARs), Silicon Valley tech companies and plenty of new start-ups. In fact, 41 payments technology startups, many of them ISVs and PFs, joined ETA in 2018, taking advantage of our new discounted membership program to get connected in the payments industry. At TRANSACT, our annual show and the leading payments industry trade event, software companies and startups flourished in our Startup and Next-Gen Payments zones on the show floor. Plus, we’ve launched a Self-Regulation Program and new educational products for payments technology companies designed with modern software partnerships and products in mind.
At ETA’s 2018 Strategic Leadership Forum – the premier event for the payments industry’s top leaders – we heard from leaders at firms like Worldpay, Fiserv, Samsung, Visa, BlueSnap, GTCR and others about how this ever-changing, tech-driven new environment is shaping and growing the next era of payments technology. In November, we were in the heart of San Francisco at the Wells Fargo Connections Center to continue the conversation with some of payments’ most revolutionary leaders at TRANSACT Tech San Francisco.
Wherever we are, ETA will continue to ensure that the tech-forward solutions our members bring to market are the cornerstone of our mission to grow the payments industry.
This column originally appeared in the September-October edition of Transaction Trends magazine. Click here to access the magazine.