[Dave Birch] I had a chance to read through the Diamond report on the future of the cards industry. It provides a useful overview of the challenges and opportunities for cards in the U.S. It also makes an interesting point about contactless that is well worth reviewing.

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The report says…

One particular threat to issuers is in the area of contactless payments. The banking industry is making a significant investment in rolling out this technology, but it is very easy to imagine that once there is critical mass at the point of sale, consumers will migrate to RFID-enabled cell phones as their device of choice for initiating contactless payments. Since consumers will want to maintain payment choice, this will likely be supported by mobile wallets. The path of least resistance for this? PayPal, which already has 114 million people signed up for its e-wallet, and works diligently to get its subscribers to settle directly to their checking accounts, bypassing the card networks. A strong player at the front-end of the transaction chain routing transactions away from the credit card networks is not the outcome issuers want from their contactless investments.

That’s a nicely summarised line of thinking which is in line with a talk on NFC payments that I will be giving in Paris later today. All of the effort going in to migrating to contactless POS creates an environment for cash replacement: we’re all agreed on that. The question is who will take most advantage of that: Citibank or Vodafone, Starbucks or Disney? Or even PayPal.

[posted with ecto]

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