The rapid pace of change has forced payment companies to collaborate more often, a posture that will help the industry in the future, even if EMV and other innovation disrupts the market.
Unlike the entertainment industry, which initially tried to stop the advancement of new ways of listening to music or watching movies, the payments industry is now embracing change and seeking better ways to serve merchants and consumers, said Jason Oxman, CEO of the Electronic Transactions Association, during the Financial Services Roundtable's BITS Emerging Payments Forum in Washington, D.C. on June 3.
"We are doing well in collaborating, as you see associations and institutions working with Apple, Samsung and Google to make mobile payments happen," Oxman said. "The good news is that no one is looking to completely upend the ecosystem, or get people away from their banks or credit card numbers. We are just changing the way they interact with them."
The development of the EMV Migration Forum nearly three years ago marked the first time the entire payments industry came together to address issues regarding the conversion from mag-stripe technology to chip cards, said Randy Vanderhoof, executive director of the Smart Card Alliance and EMV Migration Forum.
"I wouldn't quite agree that we are all aligned working clearly together yet, but we have made great strides in the last few years," Vanderhoof said.
Many in the industry came to forum sessions with preconceived notions about how the others operated their businesses, Vanderhoof said. "Through dialogue and discussion, and some rather heated arguments, everyone learned about what the others' roles were and they were enlightened to the understanding that there are things about the ecosystem that need to be changed for the betterment of everyone."
That type of understanding has been a side benefit of the card networks' short window for the mandated Oct. 1, 2015 EMV liability shift taking hold only a few years after the migration was announced, Vanderhoof said. It will serve the industry well when future discussions about tokenization, mobile payments and data security take place, Vanderhoof added.
Proof of such improved harmony would have to come from the voices of retail leaders, considering the retail industry has engaged in payments squabbles on various fronts. Retailers have legal battles with card networks over interchange rates, have been vocal about a preference for chip-and-PIN over the chip-and-signature standard taking hold in the U.S., and have suffered consumer trust fallout over the mounting data breaches taking place despite paying for Payment Card Industry security standard compliance.
"It will surprise some, but I agree that collaboration is key for the short-term solution and the long-term solutions," said Brian Dodge, executive vice president of the Retail Industry Leaders Association.
Even though he professed his belief that chip-and-PIN is the most secure option, Dodge agreed that all industry players are serving the same customers, but have different incentives in the process.
"The more we talk about these issues and understand the points of view of others, the better it will be for everyone," Dodge said.
However, collaboration is always put to the test when the topic is something as complex as the payments ecosystem, said Jason Kratovil, vice president of government affairs for payments for Financial Services Roundtable.
The flip side to any good vibes about payment collaboration is that the industry faces "a palpable dark underbelly of tension" in which all of the new players and new interests being driven by innovation leave many questioning who is in control, Kratovil said.
"What is the future going to look like, and who is going to be in charge of dictating the way all of the disparate players in the ecosystem interact with each other?"
In the near term, that creates the most tension and has to be resolved, Kratovil added. "When it is resolved, that will open the floodgates and encourage everyone in the ecosystem to move forward in a more holistic way."
The key question that payments leaders will have to answer is why a consumer would move from a payments network that has worked well for decades into a new technology for paying, ETA's Oxman said.
"We know consumers love mobile devices," Oxman said. "There are now 330 million mobile subscriptions in place for 320 million Americans."
With that backdrop and the productivity that mobile devices promise, it makes sense that Android Pay touted a loyalty program attached to its mobile pay system and that Apple Pay is certain to add one soon, Oxman said.
However, payments innovation discussions in the coming years are not likely to push for major changes in the ecosystem.
"Our payments system, the payments networks and the banking networks are not going to go anywhere," Oxman said. "They are robust, secure and reliable. They may get upgraded, but the emphasis will be on implementing new means of transactions within those networks."
Though technology changes rapidly, payments innovation moves slowly.
Still, consumers may soon enter a different shopping world in which payments are somewhat "taken out of the equation," said Vanderhoof of the EMV Migration Forum.
"We will see a fundamental shift away from the static payment [card] identifier to a different form of authentication," Vanderhoof said.
In that world, a consumer will walk into a store, be alerted about various deals and offers, but have a payment authorization and method in place that the store is already aware of, Vanderhoof added.