Consultant: Banks, card issuers unlikely to win payments battle

Google Wallet may not dominate contactless payments, but it is more likely to be a significant player in the space than existing banks and payments firms, says a prominent global banking consultant.

Brett King, banking consultant and author of the banking and technology book, Bank 2.0, said in an interview with Banking Day that he was "very bullish" on Google Wallet, the mobile payment system announced last week by the online giant. The Google system will enable payments using near-field contactless (NFC) technology built into phone handsets running Google's Android operating system.

Visa and MasterCard already issue cards enabled for contactless payments. Australia has also had one of the world's biggest roll-outs of contactless payments terminals; they appear in stores including 7-Eleven, Caltex and Woolworths.

Contactless payments are expected to replace many cash transactions, and King is a well-known enthusiast for the technology.

King said that "it remains to be seen" whether Google or other players will dominant digital payments.

But he noted that when businesses move from physical distribution to digital distribution "it's almost never that the incumbents survive".

"The biggest seller of books these days is Amazon. The biggest seller of music these days is Apple. Who is going to be the biggest in payments and banking?  It's probably not going to be banks or card issuers, because the incumbents don't respond well to that pressure."

King also argues that NFC-enabled phones will not merely duplicate the functions of NFC-enabled cards, but will place payments in a new context.

"The number one call request to call centres today in Australia in retail banks is still, 'What's my account balance?'  So, imagine how your life will be different when you pull out your phone to make a payment and you know what your account balance is before and after you make a payment.

"[The context] of that payment interaction now is very, very different.  It's not about moving from a piece of plastic that you swipe or entering your PIN into a phone. It's now about the fact that… I can understand the context of this payment in respect of my day-to-day financial life."

King, an expatriate Australian, spoke yesterday at the MFAA 2011 National Convention.