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Wednesday, October 10, 2012

The Changing Payment Landscape: Rise in Mobile Payments


By: Law Offices of Peter J. Lamont

The question of cash or credit is an integral part of the register/check-out experience.  However, a new option has been slowly making its way into businesses that gives customers the chance to pay with their mobile phones.  There are many apps and features for cell phones and some are simply fads that quickly become obsolete, but some make a meaningful impact for companies and industries.  Mobile payments fall under the latter category.

Although mobile payment is the overarching term for this new technology, it takes on many different forms.  One example is a program called LevelUp, which allows users to link a credit or debit card to their account.  Each person has a QR code unique to that credit card which is then scanned at the register to make a purchase.

Using LevelUp is convenient for customers, but it also functions as a loyalty program that rewards them for their continued business.  It provides companies with analytics about their customers and opportunities for unique marketing campaigns.  At the moment, restaurants and eateries make up the majority of members that accept LevelUp.

With benefits coming to both consumer and business alike, the only group really hurt by these changes in the landscape are the credit card companies.  Using LevelUp as an example once again, they have created what is known as Interchange Zero.  Interchange Zero is the idea that there should be a "frictionless flow of money" and companies should not be forced to pay a processing fee for each transaction.  LevelUp does not charge swipe or processing fees. 

The major credit card companies can relax for now as the idea is still in its early stages, but this is a sign of things to come for them.  Technology will continue to evolve, which means that the way we pay will continue to change with it.  It will be interesting to see where the payment space ends up and if we could see a day where Visa is accepted almost nowhere.
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