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10 Predictions for E-Payments

10 Predictions for E-Payments. John Stewart Digital Transactions. 1. Apple Pay Will Revive Wallets . 11 issuers already on board McDonald’s, Disney, Walgreen, others accepting 800 million iTunes accounts with payment credentials No discernible fee to merchants Based on 2-year-old Passbook.

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10 Predictions for E-Payments

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  1. 10 Predictions for E-Payments John Stewart Digital Transactions

  2. 1. Apple Pay Will Revive Wallets • 11 issuers already on board • McDonald’s, Disney, Walgreen, others accepting • 800 million iTunes accounts with payment credentials • No discernible fee to merchants • Based on 2-year-old Passbook

  3. 2. Square Will Not Remain Independent • $6 billion valuation • Sell while the iron is hot • Company needs bigger merchants and a consumer strategy

  4. 3. eBay Will Not Spin off PayPal • Recent news reports revive prospect of spinoff • Won’t happen—at least not any time soon • Data synergies too strong, benefits eBay marketplace • Braintree/Venmo technology (eg, one-click) important to eBay

  5. 4. Transactions Will Always Carry a Price… • …And merchants won’t like it • Possibility of new token fees; issuers already getting hit • Interchange structure may change but won’t go away

  6. 5. …But Interchange Will Come Under Greater Pressure • Token fees won’t bring in what the networks had hoped • But they will fuel merchant attacks on interchange as a result of… • …lower fraud and… • …resentment over yet another fee (assuming they hit merchants)

  7. 6. New Fees Will Add up • FANF network fees at Visa—recently tweaked for aggregators • Apple’s 0.15% tokenization fee—on top of token-service fees from Visa and MasterCard • Right now, tokenization fees hit issuers. Could hit acquirers/merchants down the road

  8. 7. Breaches Will Continue Indefinitely • Cybercriminals have figured out the system’s weaknesses—new malware variants emerge constantly • Incentives are strong with stolen credentials fetching good prices • Even with EMV, fraud will shift to e-commerce

  9. 8. EMV Will Take A Long Time… • Level Four merchants won’t adopt any time soon • Costs of equipment, staff training • Liability shift not necessarily a spur to adopt • Some merchants argue cost of fraud cheaper than adopting • The wild card is Apple Pay—driving NFC deployment will also drive EMV deployment

  10. 9. …But Real-Time Payments Won’t • NACHA trying again for same-day ACH, but this time with multiple settlement windows • Fed lining up in favor • New processors like Dwolla agitating for real time settlement • Next step will be real-time

  11. 10. Host Card Emulation Will Bifurcate NFC • A tale of two NFCs—secure element and HCE • Apple Pay’s emergence on a secure element means divide between iOS and Android, with Android being largely HCE • HCE less secure but more appealing to issuers

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