So are merchants stuck, at the mercy of a conspiratorial oligarchy, unable to cause or benefit from change? Well, not really. Things are changing in the retail e-payments space, of course. In a survey of the top 100 largest e-commerce sites to see what payments they accepted, acceptance of “alternative” payment mechanisms such as Google Checkout, PayPal and Bill Me Later had gone up 267% in six months, so consumers and merchants are getting more choices. Wal-Mart’s decision to support e-cheques (which they think will save them a BILLION dollars per annum) will presumably cause other merchants to look at the possibility. Apparently a couple of retailers are going to trial BillMeLater in physical stores as well.
The entry of significant new players such as Google must have an impact. Google Checkout is, in fact, quite a useful example because their business model is somewhat different from other payment companies. Google is prepared to run Checkout at break-even, or even at a loss, because it sees the service as a useful way to bring more advertisers to its all-important AdWords business, which charges retailers for search-related “keyword” ads. Checkout has already signed up a quarter of the top 500 online retailers, largely thanks to its offer of free payments processing until 2008. Once the promotion ends, every dollar a merchant spends advertising with Google will entitle it to $10-worth of free processing. This could be more of a window into the future. Just as in the case of DoCoMo, payments is not a business only about transaction fees and revenues but is an integrated part of a much bigger play.
The current situation is not mandated by the laws of nature, but has been formed by a particular set of circumstances. There are people working to change it and the payments cards industry cannot just assume that it will continue to dominate. This isn’t to say that people won’t be playing with cards in the future: they just won’t be cards from their bank. In the US and the UK, for example, it may well be that some kind of identity card (or, more likely, some kind of identity card stored in a mobile phone) becomes a platform for a much wider variety of payment options.
These opinions are my own (I think) and presented solely in my capacity as an interested member of the general public [posted with ecto]