7 predictions for 2017

Published
  • December 30 2016, 11:04am EST
2017 promises to be a defining year for many in the payments industry. Here's a look at what to expect.

2017 promises to be a defining year for many in the payments industry. Here's a look at what to expect.

A comeback for contactless cards

Contactless cards are poised for a resurgence on a global scale. Even in the U.S., where many issuers abandoned their contactless card plans years ago, some are making big moves in the market — most notably, Citi has committed to putting contactless technology in the cards it issues to its massive portfolio of Costco members, despite Costco not having contactless card readers installed. In the U.K., more than one in five card transactions was contactless by mid-2016, doubling the volume from the prior year, according to recent data from the UK Cards Association.

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There's money in the Internet of Things

The trend of putting network connectivity into everyday objects represents a big opportunity for the payments industry. Amazon is aggressively pursuing partnerships with appliance makers to put its Dash reordering system inside, enabling scenarios such as washing machines to directly order from Amazon when they sense they are low on soap. Amazon is also promoting its Echo home speakers as e-commerce portals, with some deals available only to those willing to order by voice. Meanwhile, Samsung and Mastercard are working with grocery stores to enable consumers to restock their refrigerators from a screen built into the door.

Cars get payments built in

More automotive companies and agencies are making moves in the payments world. The most recent example is Volkswagen's purchase of PayByPhone, a Canadian parking payments provider. PayPal is also getting on board with this trend, recently becoming a payment option for parking throughout Toronto. Parking meters and garages are among the easier targets for this technology, but there are other use cases in play. Visa, for example, has been working on a system for purchasing fuel and food orders from a car's dashboard.

Samsung Pay's make-it-or-break-it year

Samsung Pay's magstripe-emulation technology makes it compatible at more payment terminals than other mainstream NFC mobile wallets such as Apple Pay and Android Pay, but it needs more to lure consumers away from its growing stable of rivals. The widely publicized recall of Samsung's Note 7 handset could be a major setback, since Samsung Pay works only on Samsung devices. And Samsung's most recent attempt to extend its wallet brand to iOS, a Samsung Pay Mini app, was rejected by Apple. However, despite these issues, Samsung has aggressively invested in putting talent and promotion behind its mobile wallet, giving it the means to survive in this cutthroat market.

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War on cash

India and Venezuela are cracking down on the use of larger cash denominations, with both countries explaining their moves as a way to deter tax fraud. The situation for cash may not be as dire in the U.S., but many companies are working aggressively to win the payment volume that cash so stubbornly controls. If digital wallet providers get a boost from the situation in India and Venezuela, those companies can take their experiences to other regions to shift consumer behavior worldwide.

Strange bedfellows

In 2016, Visa and PayPal ended a rivalry that spanned nearly two decades, based on PayPal's longstanding policy of deterring the use of credit and debit cards as funding mechanisms for its mobile wallet. Similarly, the Merchant Customer Exchange, an alliance of mega-retailers formed to wrest control of the mobile wallet market from banks, has allied itself with JPMorgan Chase's Chase Pay. In the year ahead, it is likely that this trend will continue, with more longtime rivals setting aside their grievances to improve their chances of winning consumer walletshare.

EMV takes a back seat

Terminal makers and ISOs are starting to realize that EMV has lost its appeal as a selling point of new terminal hardware — and the card networks' decision to delay the EMV deadline for gas pumps has likely stalled some gas stations' plans even further. EMV technology will still spread and will have a key role in maintaining security at the point of sale, but other innovations will take the spotlight, including mobile point of sale and beacons.