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With consumers already changing their spending patterns to cope with an oppressive recession, the arrival of mobile payments could disrupt long-standing relationships among merchants, card processors and the major payment networks, executives warned this week at the Strategic Leadership Forum in New York, sponsored by the Electronic Transactions Association, a Washington, D.C., trade group. A number of large merchants already have undertaken major overhauls of their point-of-sale systems to accept contactless transactions, and more are considering such terminals for their next technology refresh, an indication they foresee impending changes in the marketplace. And while the timing of the transformation remains in doubt, the movement by big competitors is putting pressure on smaller bank acquirers, processors and independent sales organizations to equip their merchants with the latest gear. "It could take three or seven or 12 years, depending how fast the merchants go," says Bob Philbin, president of TSYS Acquiring Solutions, a Tempe, Ariz.-based unit of card processor Total System Services Inc. Although alternative payments can take a variety of forms, such as the automated clearinghouse Shell Saver Card First Data Corp. offers to customers of Royal Dutch Shell PLC, much of the attention focused on mobile transactions at the ETA forum. TSYS Acquiring announced the introduction Tuesday of a smartphone-based payment application called MobilePASS (CardLine, 10/13). Although the application is designed primarily so mobile workers, such as plumbers, can accept payment cards using a wireless card-swipe device, the TSYS technology can accept various other payment forms, including funds transfers and checks, and it can connect to multiple payment devices, Philbin says. First Data is focusing more on the mobile consumer. The Atlanta-based company expects to have 10,000 merchant locations by the end of the year offering its GoTag, which a consumer can stick to the back of a mobile handset–or anything else–to make contactless transactions, says Barry McCarthy, First Data general manager of mobile commerce and point of sale. "Technology is a prime driver for payments," he says. So far, the moves have been fairly linear and, with the exception of the Shell card, the transactions continue to run mostly on the Visa Inc. and MasterCard Worldwide networks, but more disruptive technologies are beginning to emerge.
