As more payments companies seek the next big thing, they are finding that mobile payments tech is due for a makeover, and a lot more attention surrounds digital currency such as Bitcoin.

"We ran a youth hackathon, and one of the winning projects was a Bitcoin app," says Jo Webber, CEO and founder of Oink (formerly Virtual Piggy). "The interesting thing is we had another young person at the hackathon who built an app to connect to the first kid's Bitcoin app," which lets users post items for sale and connects to Bitcoin networks to make purchases, she says.

Webber was one of several payments executives and analysts PaymentsSource contacted to discuss which payments innovations will grab the most attention in 2014. In most cases, the technology itself already exists, and is poised to become mainstream in year ahead.

Many are watching Bitcoin, or virtual currency in general. It's a very controversial subject, at once innovative and potentially fraught security issues.

"You can see that when it comes to doing business on a global basis and how complex that is, virtual currency makes a lot of sense," Webber says.

Not everyone is sold on Bitcoin's future, however.

"'Notcoin' is perhaps better," says Gareth Lodge, a senior analyst at Celent, who says there are some positive elements to Bitcoin, such as the technology, but there are too many issues that hinder its long-term success.

"The chief issue is the conflation of people confusing it between a payments type, a currency and an investment vehicle, and it can't succeed while being all three," he says.

Other virtual currencies will also take center stage in the next year. "While Bitcoin is probably destined to implode, some form of alternative non-fiat [non-government] currency will make headway," says Seth Priebatsch, "chief ninja" (CEO) of SCVNGR, the company behind the LevelUp mobile payment system.

Mobile Goes Shopping

Another technology strategy that came up frequently is the increasing role of mobile in both payments and shopping. While the past couple of years have focused on how mobile phones can be used to execute payments, the next year will see a maturation of how the mobile payments fit in with sales and service.

"Mobile payments isn't about mobile payments anymore, it's about customer relationship management," says Richard Crone, a payments consultant.

Some companies, such as PayPal and MasterCard, are already linking mobile payments to customer data to provide better marketing and service throughout the shopping experience. A main advancement in payments technology next year will be the growth of apps that integrate the payment with actionable content, Crone says.

The next wave of mobile wallets will focus on the broader shopping process, says Greg Cohen, chief revenue and strategy officer at Merchant Warehouse.

"The e-commerce wallets will create preferred shopping experiences through seamless enrollment and check-out next year," Cohen says.

Brick and Mortar Technology

As mobile payments are linked with other services , the mobile channel will grow less distinct from brick and mortar stores. "Call me biased, but [mobile in-store] is making headway and is going to become a standard expectation for leading brands to offer a mobile payment option," Priebatsch says.

Priebatsch's LevelUp allows merchants to scan a QR code displayed on a shopper's phone to accept payments. Its app provides discounts and rewards to attract new and repeat business at its merchants' stores.

PayPal's ongoing effort to bring its e-commerce model to retail stores is part of that trend. So is PayPal, Apple, and others' use of Bluetooth Low Energy (also called Beacon or iBeacon), an alternative to Near Field Communication (NFC). Bluetooth Low Energy, or BLE, can also be used to sense when a customer has entered a particular store.

"The experience is more important than the payment. It drives more loyalty and higher activity at the merchant," says Ginger Schmeltzer, who leads payments innovation at Fiserv. "Beacon is an exciting part of that. It will be in many phones so it can be offered to a lot of people."

Shopkick, for example, is testing Apple's iBeacon at Macy's stores in New York and San Francisco. The mobile payments and loyalty company sees potential for the technology to combine the experience of shopping at home, on mobile devices and in stores.

BLE technology can be used to tell a shopper if a desired product is nearby, allowing the consumer to purchase the item on the spot or order it to be shipped.

The technology is relatively new in payments, though it will get more of a look in the next year, requiring retailers to adapt. "There are some behavioral challenges and training challenges," Schmeltzer says.

A Bad Year for NFC

The growing popularity of BLE is bad news for NFC, which some mobile wallets use to enable contactless payments.  BLE's range is better than NFC, and NFC is still not supported on many smartphones.

Other technology is also advancing for contactless payments. PayPal and the Merchant Customer Exchange are using software to drive their mobile payments initiatives, and Google is deploying host card emulation, a software-based technology that can bypass the smartphone's secure element to execute NFC payments.

"NFC is 'Not for Consumers,'" Lodge says. "The value proposition for consumers needs to be figured our better. Numbers will rise¬óbut we're a long way from NFC being anything but niche."


One of 2013's technology buzzwords was "omnichannel," a term used to describe a seamless customer experience across mobile, Web and other channels.

That trend will be advanced in the next year, fueled by acquisitions in the payments industry, Lodge says.

NCR, for example, purchased Alaric and Digital Insight in December; and ACI purchased Distra earlier in the year.

In the case of NCR, the acquisitions will allow it to offer an integrated suite of financial services at ATMs, mobile devices and websites. ACI is using Distra to integrate new payments technology to its clients' existing architecture.

"Rather than trying to get every channel identical, you can use any asset from any channel to deliver something that utilizes the strength of the channel. It's a subtle but powerful shift," Lodge says. 

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