With the global shift in consumer payment options, investors should take heed of payment processing innovations that are quickly transforming banking transactions around the world. With 85% of global retail trade in cash, there is a major market for growth in the payment industry in the years to come. Although Visa Inc (NYSE:V) is the largest player in the payment processing field, there is definite room for growth in the payment processing game.
For the business merchant
With Visa Inc (NYSE:V) having recently released earnings with revenues topping $1.3 billion, up 17% from the previous year, the company is leading the pack in payment processing. With innovative technology and strategic acquisitions, Visa Inc (NYSE:V) is grabbing land in the emerging payment space. With Visa extending its contract with Monitise and acquiring Fundamo, it is putting itself in a position of becoming the industry leader for both banked and unbanked consumers worldwide. Monitise is a payment technology company while Fundamo is a mobile financial services providerin developing economies. Both these companies will enhance Visa Inc (NYSE:V)‘s services, while continuing to drive its growth in emerging markets.
For the traveler
Chip technology has been around since 2004, though there are few banks in the United States that have chips in their everyday cards. For frequent globe trotters, chip-enabled cards offer the most protection for international travel.
Bank of America Corp (NYSE:BAC) has offered chip-embedded credit cards for several years, but most of these cards are not available to the average credit card user. These cards, armed with an embedded microprocessor chip, are the best choice for secure payments by encrypting and storing the account information at the time of transaction. Most of these cards are issued in the U.K. and Canada, but some of Bank of America Corp (NYSE:BAC)’s domestic credit card lines offer them as well. These cards are more secure than regular cards and are critical for overseas secure travel.
Credit cards with chip technology, also known as EMV (EuroPay Mastercard Visa), improves both the convenience and security of customers’ transactions when traveling abroad. “We want our customers to have the best possible experience while making purchases with their credit cards anywhere in the world,” explains Susan Faulkner, the head of Bank of America’s Consumer and Small Business Products division. Many countries outside of the United States have already converted from magnetic strips to EMV technology as the payment system has evolved internationally.
With Google Inc (NASDAQ:GOOG) Wallet, merchandisers and online shoppers can have access to a virtual wallet system that allows both payers and payees to send and receive money. Google Inc (NASDAQ:GOOG) hopes that the widespread NFC infrastructure that supports Google Wallet will become more prevalent as more consumers move to a pay-and-go system. One of the advantages to using Google Wallet is that the user has access to all his cards in a mobile device. If paired with a smartphone, Google Inc (NASDAQ:GOOG) Wallet would have the capacity to handle payments easily, as well as become a universal form of currency.
For the small business
With industry-disruptive technology, Square is quickly becoming the wallet of the future for small retailers. With small processing fees and innovative technology, more and more independent retailers are turning to Square to process payments instead of traditional vendors that feature a higher processing cost.
With retailers and small mom-and-pop businesses looking for ways to cut costs, Square is the perfect choice for those looking for a smart option for payment processing. With traditional vendors charging up to almost 3%, Square charges a flat fee of 2.75% for each swipe, or a key-in fee of 3.5% + $0.15 with each transaction. Square emails a receipt directly after purchase as well and also has a built-in tip calculator when processing payments.
For the skeptics
Bitcoin is transforming the way that money is being transferred around the world. Bitcoin works on a system that in a lot of ways is the opposite of a bank. With account numbers being stored publicly in a transaction log, members can verify transactions through a collective network. Using immediate payment options, users can transfer money across the globe without any of the hassle or governance of a regular bank. Although this system may seem like a disaster, Bitcoin might actually be the optimal currency for the avid anti-bank protester.
The bottom line
In closing, payment processing methods are changing the global economy. From the disruptive technology of Square, to the banking system of Bitcoin, there is new technology emerging every day in our monetary system. With Visa Inc (NYSE:V) grabbing markets overseas, Bank Of America using EMV technology and Google changing the way we hold our pocketbooks, the future of banking is in our hands as technology processes worldwide.
The article Swipe, Click and Go: The Future of Payment Processing originally appeared on Fool.com and is written by Kaitlyn Tokay.
Kaitlyn Tokay owns shares of Bank of America. The Motley Fool recommends Google and Visa. The Motley Fool owns shares of Bank of America and Google. Kaitlyn is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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