Stay tuned with CashEssentials news ! - beyond payments
By subscribing, you accept our Privacy Policy.

The over-choice paradox

Categories : Cash connects people
November 2, 2016
Tags : Consumers, Mobile Payments, Payment instruments, Payments competition, Retailers
There are too many payment options today causing confusion for merchants and consumers.
Communication Team / Equipo de Comunicación

There are far too many payment options today causing havoc for both merchants and consumers. Merchants are confused because they are unsure about which payment provider to choose from. They also find it daunting to compare best hardware options, installation services and ongoing fees. Consumers, on the other hand, don’t know where to turn because the payment options are many, and growing, while security issues remain a relevant concern.

Fifty percent of retailers in the UK say that they aren’t planning on installing a contactless payment system due to its cost and disruption of installation. Also, the complexity of the payments world is such that there are often over six different parties involved in a single payment process, not even including the retailer.

Similarly, 50% of consumers in the UK have explicitly said that they will not use their mobile phone for an in-store payment option as security concerns related to such transactions are real. Also, consumers don’t change their behaviors that easily. When the current system works well, it is often hard to find the incentive to try something new. In the payments world, it’s not as simple as buying a smartphone. There are too many variables that must change for the system to work properly, from issuing contactless cards, to retailers upgrading their terminals, to education and communication by card providers such as MasterCard and Visa.

Surprisingly, those who are gaining ground in the payments world are not the traditional actors like Visa, MasterCard or commercial banks, but rather companies that have gained user confidence via social networks such as Alipay and Facebook – platforms where people have already begun to transact friend-to-friend for free.

Head of Level39, Eric Van der Kleij, states “Companies that are more efficient at onboarding customers will be able to win a piece of the pie […] Facebook could afford to run the equivalent of a new bank for free – that’s where you might see a giant emerge.”

To read more, please click here.