payment method Archives - Page 3 of 3

Where does the money go?

So when you do a card payment, the shop owner can be certain she's getting paid because the card terminal does a real-time authorisation out of your card account ('value now'); but the payment system actually moves the money early the next business day morning or, for some payments, the morning after ('funds later'). Payments made on the weekend are the same in that value (authorisation) is still now, but the system only actually moves money between financial institutions on weekday mornings – which could be 2 to 4 days later. By the way, 'value now, funds later' is a lot better from the shop's perspective than 'promise now, funds later' – which is how a personal cheque works. In the good old days of branch banking, most people couldn't check their account balance outside business hours. Nowadays we all have much better information about our accounts through widespread ATM networks, internet banking and phone banking.

Context is everything

I recently had the rare and valuable chance to take a deep dive into someone else's payments pool. Such comparisons are always refreshing, not to mention instructive. The Canadian Government has appointed a Task Force to review the Canadian payments system, and the Task Force has embarked on a series of intensive workshops with senior people from across payments – financial institutions, schemes, corporate and government users, merchants, consumer groups and others. They kindly invited me to participate in a 3-day workshop that ranged widely over the future payments landscape as they are seeing it in Canada. This was, I have to say, an impressive effort.

Not m-payments again!

Mobile payments must be the most heralded innovation of all time. We have been talking about it for 10 years or more, and still don’t have a reliable definition, let alone a clear, widely-accepted process flow. Mobile payments' can be: - A text/SMS direction to a stored value service; - A transfer or top-up of airtime (air minutes) between mobile accounts; - A charge on your phone bill; - A contactless (near field communication or NFC) card transaction initiated from a mobile device, either by a chip that resides inside the phone or a sticker attached to the outside; - An internet payment executed from the mobile using any number of web-based services; or - An app-driven service for 3- and 4-G phones using a range of wireless connections. All of these are in operation, somewhere in the world. Do we need them all here in Australia? Probably not, but in the vibrant world of retail payment innovations, that's probably the wrong question. Rather, we might ask "which one(s) can win in an open, competitive marketplace?"