The Modern Movement of Money

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As a business owner or executive, are you thinking about how your money moves and the impact that could have on your bottom line? If not, perhaps you should be.

As evidence of this shift within my industry of financial services, there’s much less of a need for cash (I barely go to the ATM once a month now) and even less need for plastic than ever before. There have been two milestone events in 2015 that have created a tipping point. The first is that the Millennial Generation-people born in the 80s or 90s-has surpassed the Baby Boomers as the largest segment of the US population. The second is that more than half the people who own a smartphone have downloaded and use their financial institution’s mobile banking app. The average person visits a branch only four times per year now!

So what exactly do modern forms of payment look like and how do they work? We've come a long way since PayPal, the online payments system founded in 1998. I'll focus on just a few of the more prominent recent advancements that highlight security and simplicity. In the wave of massive and high-profile merchant security breaches at retailers such as Target and Home Depot, the traditional habit of swiping plastic at the point of sale carries a risk that’s on the rise. The prevalence of fraud in this area makes the following options even more important and appealing to savvy consumers.

Chip Card Technology
Chip cards, also known as smart cards or EMV cards, contain embedded microprocessors that provide strong transaction security protection and other features not possible with traditional magnetic stripe cards. While this technology can't prevent all security breaches, a chip card is an important first line of defense. If a retailer uses a chip-enabled payment terminal, the security features in a chip card make it much more difficult for thieves to steal account information. Practically every other developed country in the world has already moved to chip cards because it had a dramatic reduction in card fraud compared to the magnetic stripe format. The fact that the US payment system is the last to adopt chip cards has driven the increase of merchant breaches the past few years.

Mobile Payments
Perhaps the most notable mobile payment alternative to hit the scene, Apple Pay™ continues to grow in popularity since its inception in October 2014. By now, close to 500 financial institutions have introduced it to members and customers. If you’re not yet familiar, Apple Pay is a new category of service that will transform mobile payments with an easy, secure and private way to pay with an Apple device. Using device specific account numbers and single-use dynamic security codes with each transaction instead of an actual debit or credit card number, payments are transacted by activating Apple Pay with your fingerprint and holding your smart device up to a contactless payment terminal at participating merchants. I like it so much that I ask if they accept Apple Pay at every store I go to before I grab my wallet and credit card to pay.

On the horizon later this year and early in 2016 are Samsung Pay and Android Pay and who knows what other mobile “Pay” products will emerge, but I believe they are here to stay.

Online Checkout
PayPal is most familiar to many of you in this category when you want to pay for something online, but another emerging option is VISA Checkout. This is a digital payment service that greatly simplifies the “checkout” experience using a secure, single sign-on across any online or mobile device using a customer’s preferred payment method. In this case, you load your favorite Visa Debit or Credit Card with all the standard payment and billing information once. Then when you checkout, you only need to enter your unique user id and password to make your purchase. The main benefit is that information is stored in one place securely and is only provided to online retailers when you are ready to checkout which is a real time saver. This is another service I look for when shopping online, and I have picked one business over another if they had this service and similar products for sale.

There are also so many other new forms of payment you’ve surely heard about; among them are Bitcoin, Amazon Coins, Google Wallet, Simple, and more. All of them are addressing different needs and attracting unique niches of consumers.

So, why should businesses take the time to care about the changing world of modern money movement? If you’re not giving a good deal of thought, time, and resources to this area already, allow me to suggest a path that can have a tremendous impact on your business. For starters, consider three good reasons to put some energy toward payment technology:

Perception. Keeping up with the latest innovations will allow you to “wow” your customers. For now, it might be only the early adopters you’re impressing. Yet sooner than you think, these forms of payment will be considered mainstream. Staying ahead of this game will have an impact on how your business is perceived by your customers and potential customers.

Conversion. In a retail or ecommerce environment, consider how a streamlined checkout process can help you capture sales that might otherwise be lost. By providing your customers the most seamless, convenient, and fastest ways to pay in person, online or on the go, you can impact your bottom line.

Competition. Because if you don’t care about it, someone else will. Make a big deal about how easy and secure payments with your business can be made, and it can become a competitive advantage. Ignore this area and it can easily become your shortcoming.

My best advice – embrace progress and innovation! In the two year period of 2015-2016, we will see more changes in the way people move money than we have seen in the ten years prior to this. Stay aware of and keep pace with the trends or work with a payments partner that can help do this for you. The attention you give to the money movement within your business is sure to pay you back.

Chris Sibila is the EVP Payments and Technology at Elements Financial.

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