The Future of Cash in a Frictionless Society

New apps, features, innovations and familiarity signal faster changes for consumers.

The Royal Bank of Canada recently published an article about the future of money.  In the article they site several studies showing the acceleration in consumer adoption of 'FinTech'.

The EY FinTech Adoption Index is a fascinating look at this global trend.

A Nielsen report on mobile payment trends also provides insight.

The Implication: Each business must ask, 'Where are the narrow sectors and friction areas of our payment/transaction system and how do we eliminate them?' 

As these reports show, consumers avoid friction and are familiar with how their smartphone can help them achieve their goal of less friction in their transactions.

PayPal to expand digital wallet and coupon services with acquisition

PayPal has acquired mobile payment company Paydiant in an effort to expand its breadth of mobile solutions for retailers. Although terms of the deal have not officially been disclosed, a report from Re/code indicated that the acquisition will cost PayPal up to $280 million. 

The acquisition comes a little over a year after Braintree was acquired by PayPal. With PayPal's support, Braintree continues to see rapid growth. In fact, its authorized payment volume in 2014 was $22.8 billion, more than doubling from 2013. 

With the addition of Paydient to its portfolio, PayPal believes it will become an even stronger business partner for merchants. Paydient's mobile payment technologies have helped companies like Subway, Capital One and Harris Teeter build mobile payments, offers and loyalties into their own mobile applications. They also provide the mobile wallet platform for MCX whose members include many of the world's largest retailers including Walmart, Target, Sears, Wendy's, Exxon, CVS and more. 

The acquisition is subject to customary closing conditions including regulatory approvals, and is expected to close in late March or April 2015. As per the transaction, all of Paydient's 70 employees will join the PayPal team. 

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PayPal and EBay Chart Separate Paths into the Future

EBay will spin off its PayPal business into a separate publicly traded company in 2015.

Retweet (WSJ) - EBay Inc. said today it plans to spin off its PayPal electronic-payments business into a separate publicly traded company next year, acceding to the wishes of activist investor Carl Icahn who had pushed for the company to split.

The decision marks a sharp reversal for a company that spent a lot of time and money earlier this year fighting Mr. Icahn and the premise that eBay would be better divided. Now, eBay is employing many of the same arguments Mr. Icahn made in urging the split, saying, for example, that it would enable management to better focus on emerging challenges and opportunities and free PayPal to more easily reach agreements with companies that compete with eBay's online marketplace.

The payments landscape is changing rapidly, and Apple Inc. unveiled this month a new mobile-payment service it hopes will shake up the industry further. Also changing is eBay's leadership as Chief Executive John Donahoe steps down as CEO.

Mr. Schulman is a former Sprint Nextel executive and chief executive of Priceline.com, the discount travel website. He joined American Express in 2010 to lead the company's expansion into alternative forms of payment. There, he headed a new unit called the Enterprise Growth Group, which invested in companies focused on serving digital commerce.

Investors appeared to approve of news of the split, as shares of eBay jumped 7.4% to $56.57 in midday trading Tuesday, giving it a market value of about $65 billion. Gene Munster, a Piper Jaffray analyst, estimated the combined value of the PayPal and eBay is $62 per share.

PayPal has been on pace to overtake eBay's core marketplace by sales. In the June quarter, the payments unit boosted sales 20% to $1.95 billion and added 4.1 million new active customers from the first quarter, to 152.5 million. PayPal facilitates one in every six dollars spent online, eBay said. At its namesake marketplace, revenue rose 9% to $2.17 billion as the number of active accounts increased by 3.8 million to 148.9 million.

EBay bought PayPal in 2002 for $1.4 billion in stock. After the spinoff, PayPal and eBay will continue working together, the company said, with Robert Swan, eBay's finance chief, adding that both will have strong balance sheets. EBay plans to hold on to its current $7.5 billion in debt.

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CANADIAN MOBILE PAYMENTS GUIDELINES ESTABLISHED

The Canadian Bankers Association has announced a set of voluntary, secure, open guidelines for the development of mobile payments at point-of-sale in Canada. The guidelines, technically known as the Mobile Reference Model, will serve as a blueprint for how mobile payment capabilities can be offered in the Canadian market, including guidelines around how information is exchanged among various parties to a transaction including financial institutions, payment card companies, telecommunications companies and merchants. The participating financial institutions are: BMO Financial Group; National Bank; CIBC; Credit Union Central of Canada; Desjardins Financial Group; Royal Bank of Canada; Bank of Nova Scotia; and Toronto Dominion Bank. 


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MOBILE PAYMENTS: IS CANADA READY?

KPMG reports are a must read for those involved or wishing to be involved in electronic commerce

Building on KPMG International’s “2011 Mobile Payments Outlook” and “Monetizing Mobile” reports, the new “Mobile Payments: Is Canada Ready?” supplemental publication provides an analysis of the Canadian responses included in the global survey and provides added commentary and perspectives for select industry sectors. The report also explores the challenges faced and what companies need to be thinking about as the new value chain and payments infrastructure for Canada takes form. 

Read these reports