Identity is the next big thing for payments

This is an Article from Banking Technology by a sound and hugely respected friend David Birch

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As the mobile payments area looks set to take finally take off, the next big area for payments services will be identity and authentication, according to a leading commentator.

Digital money specialist Dave Birch, a director of Consult Hyperion, this week told the annual Payment Strategies Conference - organised by Experian Identity and Fraud - that "the evolution of an identity market is the next big step" in developing mobile payments and related services. But he warned that "the technologies involved are very different to those in the connectivity space".

"In the mass market, biometrics are about convenience, not security," he said.

Birch lambasted traditional banks and payments providers for their failure to grasp the nature of the opportunities presented by mobile technologies, which has led them to miss the boat. "I'm almost embarrassed to stand before you and say that I thought that banks and mobile operators could work together," he told the conference. "It was a stupid fantasy for which I apologise."

This has meant that it has taken longer for the infrastructure to develop than he'd predicted, but more importantly, banks are still missing out: only recently, banks in the US had told him that there is no business case for subsidising the installation of contactless readers in retail premises, just as Google was announcing that it will.

The real threat here is that while traditional providers like the banks are "having head-of-a-pin arguments about whether to charge retailers 1.73% or 1.74%, the retailers are happy to pay Google 8% because they are bringing customers through the door and payment mechanisms don't". The use of vouchers and other enticements means that Google and others are providing the retailers with new ways of attracting business - and that is what they will pay for.

It get ever so interesting as we separate Payments from Banking and Security from Networks ( especially in the mobile domain with eSIM or SoftSIM)  as this opens up the opportunity for any brand to get access to your transaction data.  As Google has already noted in their moves with Google Wallet, they don’t want 1% of a transaction fee (revenue) they want 100% of a companies marketing spend which is 10% of revenue – smart move, there is something in this identity and digital footprint!