The payment space is in an extremely transformational period but the widespread adoption of mobile payments may be four to six years away, according to comments from American Express executives.
At a dinner in San Francisco, Dan Shulman, group president of enterprise growth, spoke about the exciting opportunities and challenges of this brave new world of payments. As payments shift to a pure digital experience, companies like American Express have to double down on its technology assets and think more like a Google or Facebook than a traditional finance company.
Ultimately, American Express wants to become the default place for your commerce identity. He said the consumer should ultimately be in control of that but he thinks there’s a tremendous opportunity for American Express to carve out a dominant position if it can continue to innovate from within, acquire companies that it needs to and just generally keep up with the rate of change.
As a former CEO of Virgin Mobile, Shulman is well aware of the role mobile will play in payments moving forward. American Express launched its Serve mobile payment platform about a year ago and it’s a pretty good product that has improved dramatically since it first debuted. In particular, the company now understands how important the user interface is on mobile.
Even with all the hype about Google Wallet, NFC and mobile payments, Shulman still said that it will take nearly half a decade to really catch on because of upgrade cycles. Consumers need to upgrade their handsets for NFC-capable devices and just as important, retailers need to upgrade their equipment. Shulman said this retail refresh cycle typically takes about four years.
“I’m pleased with our progress but I will not underestimate the amount of work that needs to be done,” Shulman said.
If you’re just going to replace the swiping function with tap-to-pay, mobile payments aren’t going to really go anywhere because it’s not offering consumers a significant value. Shulman believes that additional services like loyalty cards and consumer targeting will make people and businesses want to adopt mobile payments in a big way.
Imagine walking into a store that you’ve already consented to have your information and it knows what you’re probably going to buy, can give you a geo-relevant discount offer and will make the payment process as seamless as possible. From what I heard from American Express, it is very clear that this is how it views the future and it is adjusting accordingly.
Of course, in a world where all payments are digital, a company that was birthed on the Internet like PayPal may have some intrinsic advantages and we really like its focus on mobile. Newcomers like Square are already offering some mobile payment solutions which don’t even require you to pull out your phone and it’s quite a pleasant experience. Many of these companies also don’t have the entrenched businesses and mindsets that a company like American Express has.
Shulman acknowledges that it may seem like it’s difficult to turn a ship as large as American Express on a dime but he believes that its existing assets are also very advantageous. Remember, the payment space is actually a pain in the butt that’s filled with regulations, liabilities, fraud prevention, customer service and merchant relations. Nokia recently found out how difficult this space can be when it killed off Nokia Money. American Express already has all those and the move toward a digital payment world could actually elevate the importance of things like customer service, Shulman said.