Industry News

Card networks eyeing mobile payments

The world’s largest payment networks are angling to capture more electronic transactions by eliminating plastic from the equation – reports the Wall Street Journal in an article entitled Card Networks Take On Plastic With Mobile Platform.

Payment networks have long set their sights on eliminating cash to capture more transactions over their processing networks – mentions the analysis.

Now Visa and MasterCard are increasing their focus on technologies consumers can use to make purchases either by simply entering a secret key on an e-commerce website, or by tapping a smartphone against a merchant payment terminal instead of swiping a physical card. When paired with special retailer deals and other consumer incentives, such services could increase transaction volume and provide new revenue streams for the payment networks, banks and merchants, analysts say.

Man with smartphoneBut payment networks and technology companies face an uphill battle in encouraging consumers to adopt such services. In the U.S., consumers have been slow to adopt mobile-payments products that enable transactions by tapping a phone instead of swiping a piece of plastic.

That is partly due to there being few phones equipped with the necessary technology, slow adoption by merchants and the fact that swiping a physical card is easy, analysts say. Regardless of how advanced a technology is, there is a chicken-and-egg problem to overcome: if there is no merchant adoption, then there will be no consumer adoption, and vice versa.