Will Mobile Payments Crush Visa Inc and MasterCard Inc

The Motley Fool's Matt Koppenheffer interviews Jason Oxman about alternative payments.

May 20, 2014 at 7:00AM

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.

Matt Koppenheffer has no position in any stocks mentioned. The Motley Fool recommends MA and V. The Motley Fool owns shares of MA and V. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

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The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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