Will Mobile Payments Crush Visa and MasterCard

At least once a week, I pay for something with my mobile phone. Usually it's dinner. I pull up an app from LevelUp, hold the QR code up, and, just like that, the transaction is done, without my credit card ever leaving my wallet.

Over the long term, what does that mean for credit card giants Visa  (NYSE: V  ) and MasterCard  (NYSE: MA  ) ? Sure, my LevelUp app is connected to a credit card today, but will that always be the case? 

During an interview at payment technologies conference Transact 14, I put this question to Jason Oxman, the CEO of the Electronic Transactions Association. In the video below, Oxman weighs in on whether he thinks the credit card industry is being threatened by the rise of mobile payments.

A transcript follows the video.

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Matt Koppenheffer: Hey, folks, Matt Koppenheffer here. I'm here with Jason Oxman, the head of Electronic Transactions Association. We're here this week at the ETA Transact 2014 conference. Jason, we've just been hearing so much interesting stuff from all these great speakers and panelists so far.

Let me start you off with what I think is a tough one, but a very interesting question to me; Credit cards versus alternative payments. When we think about the future of payment technology, how do you see that shaking out? Is there a partnership, or does one win out over the other?

Jason Oxman: The great thing, Matt, about the industry is that we are in a period of unbelievable innovation. When we talk about the "credit card industry," it has the word "card" in it because, for the last 40 years, consumers have been using the plastic card.

But we're in a period of innovation where we're moving to mobile payments, we're moving to more interesting and dynamic form factors for initiating a payments transaction.

But whatever the means that a consumer uses to initiate that transaction, whether it's the plastic card or the phone, what's most important for consumers and for merchants is the transaction be safe, reliable, secure. All of that goes into the confidence the consumers have in the U.S. to using those "cards," as it were.

Consumers in the U.S. carry one billion credit and debit cards in their wallets.

Koppenheffer: Not all at once!

Oxman: Not all at once, right.

Our industry processed $4.9 trillion worth of transactions last year, so clearly this is American consumers' preferred way to pay.

Koppenheffer: That's U.S., or globally?

Oxman: That's U.S. -- $4.9 trillion in the U.S.

There are 8 million merchants in the U.S. that accept credit and debit cards -- again, because it's consumers' preferred method of payment. So, when I hear people talk about alternative payments -- bitcoin, dogecoin, whatever is out there -- those are all very interesting currencies, if you will, and it's very easy for people to use those alternative forms of payment.

But they don't replace, necessarily, what we're used to; the safety, the reliability, the convenience, the ubiquity of acceptance that we've come to see with the payments networks that have been so robustly deployed around the world over the last 40 years.


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  • Report this Comment On May 21, 2014, at 9:15 AM, SnootsSnunshine wrote:

    MyECheck Inc.(MYEC) is a leading electronic payment technology developer and payment services provider. MyECheck operates under license to US Patent 7,389,913, "Method and Apparatus for Online Check Processing" granted June 2008.

  • Report this Comment On May 21, 2014, at 9:20 AM, nickl5 wrote:

    Get in on the ground floor MYEC

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