De La Salle University

Ramon V. Del Rosario College of Business

Financial Management Department

New Trends in Payment System

In partial fulfillment of the requirements for

BAMAFIN M71

Submitted To:
Dr. Frederick Romero

Submitted By:
Pauline Sombillo
11200014

June 9, 2015

I.

Background

Money is always only a human creation, kind of a collective illusion. Its something we invent as societies and states and
communities, and we can reinvent it if we want to. - Bill Maurer, Dean of Social Sciences $ Professor, Anthropology and Law, UC
Irvine
Nowadays, technology is opening up myriad possibilities of new payments and forms of currency such as the mobile wallets and
cryptocurrencies. Skeptics say consumers have little incentive to adopt new systems, but Millennials are more open to these
kinds of new and alternative ideas. For them, it is not enough and it doesnt make sense that they would still rely on cash, debit
and credit cards for payments. Aside from the positive feedback of the Millenials on this innovation, there are a number of
negative drivers that can account for the rise of these trends like distrust in financial institutions, and data breeches. Aside from
these, new forms of currencies are considered hedge against economic chaos. It helps protect consumers and local businesses
from economic downfall like sudden inflation.
There are so many advantages to going to electronic, including the germs on cash, the cost it takes to manufacture the cash, to
print it and secure it, and then to recycle it. Its just a very old-fashioned thing. Its going to take probably hundreds of years to
totally eliminate cash, but as with checks, well see a gradual decline in the use of cash in favor of all these alternatives. It doesnt
really matter what the alternative is. It could be anything; in the future, its a cloud. [The alternatives are] all interoperable with
each other. - DEBORAH BAXLEY, card payments expert, Capgemini
II.

Latest Trends
a.

Mobile Wallets

Basically, Mobile Wallets made use of various technologies like Near Field Communication (NFC), Bluetooth, and Bar
Code Systems. Mobile Money services allow users to access financial systems using their cellphones. This has been prevalent on
developed countries like Japan and Europe, wherein people is used to paying for their purchased goods and services using their
smartphones.
i.

M- Pesa

M- Pesa is a mobile phone based money transfer and microfinancing service

launched in 2007 by Vodafone for Safaricom and Vodacom. Over the years, Vodafone is
constantly growing that it already handles more than $1 Billion of transactions every month
in Kenya alone and has expanded its services in 10 markets, including India and Romania. It
provides services like deposit, money transfer, and payment for goods and services to
consumers.
ii.

Alipay Wallet

Alipay Wallet is Chinas Alibaba affiliate, which allows users to transfer money, pay bills, and make micropayments such
as buying a snack at a vending machine. It has been considered a leader in mobile payments worldwide in 2013 for processing
over $150 Billion.
iii.

Apple Pay

Using Near Field Communication (NFC), Apple Pay let users make payments at retail and
online checkout wirelessly. It does not require Apple-specific contactless payment terminals and will
work with Visa's PayWave, MasterCard's PayPass, American Express's ExpressPay and other large banks
terminals. Because of the back- end technology and touch to authenticate features, it is entirely safe
and secure compared to other mobile payments.
iv.

Kuapay

Based in California, Kuapay is a payment service provider that

combines digital wallet and mobile payments. The Kuapay system allows
consumers to present a one-time QR code at the point of sale. Credit card
information is not transmitted in the QR code, increasing safety. The
system also includes location-based coupons and loyalty marketing. This
one-time mechanism increases security over presenting a credit card number.

v.

Peer to Peer Payment (P2P)

P2P transactions are usually done through mobile applications, making around $1 Trillion annually. Some services,
including Dwolla and Ribbon, encompass both consumer transactions and peer-topper payments. Dwolla allows users send
money to email addresses, phone numbers LinkedIn connections, Twitter followers and businesses that accept it. Others
include Paym and Venmo, which allows consumers compensate their friends and family.
b.

Branded Apps
i.

Starbucks

The application has nearly 12 Million users and almost 15% of its total revenue are
generated from this. Basically, it include Peer to Peer Payment (P2P) gifting, and digital
tipping, and Starbucks is planning to add a feature of ordering en route a store.
ii.

Current C

Two years ago, Merchant Customer Exchange (MCX) was formed by Americas
biggest retailer brands like Walmart, 7-Eleven, Best Buy, which aims to directly impact the
way the world will transact tomorrow. Customers will be able to pay using MCXs CurrentC app, and merchants can also integrate
its payments and loyalty functionality into their own apps. MCX is testing CurrentC in selected locations around the U.S. and plans
to completely expand on the 2015.
iii.

Supermarket and Fastfood Apps

MyWebGrocer is the most well known Grocery App in the US while supermarket chain Coles is paving its way in the
Australian market. Other supermarkets that enable mobile payments include Netto, owned by German chain Edeka; Tesco, which
is piloting an app named PayQwiq in the U.K.; and Harris Teeter in the U.S. For the Fastfood Applications, these applications are
perfectly fitting for the Millennials, which are more of working on a fast- pace than the traditional or old ones. Some of the
fastfood chains that offers mobile app payment include McDonalds, KFC, Pizza Hut, Burger King, Wendys, and Subway. The most
prominent technology provided are white-label solutions like LevelUp and Paydiant, which let fast food and other merchants
create branded apps on top of their software platforms. LevelUp is also integrated into the Apple Pay system.
c.

Wearables

Glasses, watches and wristbands are just some of the wearable devices that is
commonly associated with payments for convenience. For instance, Glasspay works through
scanning in store items using Google Glass and paying with a bitcoin wallet. Other companies
that are into Glass Payments are Mastercard, LevelUp, Dwolla, and Intuits GoPayment. On the
other hand, watches like that of Samsung Gear 2 are also coming handy nowadays,
whereby users just tap their watch interface. Lastly, the use of wristbands are more
frequent during concerts and music festivals. Also, Disney started to make use of this,
particularly the RFID enabled MagicBand, to let their consumers make contactless
payments. Lollapaloozas RFID- enabled Lolla Cashless bracelets let party goers at the
Chicago fest buy refreshments and merchandise by simply scanning their wrists and
entering a PIN. PayPal introduced similar bracelets to VIP-section guests at Spains
Low Festival and Barclaycard bpay was then tested at Londons Pride event and some
summer concerts.
d.

Biometric Payment

Of course, when it comes to biometric payments, fingerprints are the most widely used physical
characteristics or security system which enable businesses identify and authenticate a persons identity.
Fingerprint features are usually embedded on Apple Pay systems and Samsung Galaxy S5. Other physical
characteristics include iris lens, voice prints, facial maps, and even vein patterns like what Swedish startup
Quixter and Biyo, formerly known as PulseWallet did. Biyo uses Fujitsus PalmSecure technology and relies on
a credit card terminal that integrates an infrared palm reader; the device was released in the U.S. in February.
Quixter says payment takes just five seconds with its system. Currently its being tested at a Swedish
university campus.

e.

Emails, Texts and Tweets

Micropayments between people by emails, texts and tweets are pioneered by PayPayl in 1999 and is later on adapted
by Amazons TextPayMe, Obopay, Square, and Google, which enables people to make person to person payment, bill payments
and product purchases via simple message. The text message system is widely used during the previous Haiti Earthquake, wherein
they were able to gather a total of $43Million through text as donations.
f.

Non- Fiat Currencies

Because of economic crisis and rising income inequality, non- fiat

currencies are currently on the rise. For instance, dozens of local currencies
circulate in Brazil, and in the UK, Brixton and Bristol Pound recently launched
mobile payment apps, and the city of Hulls Hullcoin, a digital cryptocurrency
that works like Bitcoin. Local US currencies include Equal Dollars in
Philadelphia, BerkShares in Massachusetts, Ithaca Hours in New York, and
COjacks in Colorado. All of these will help minimize the impact of and
economy on a downfall, through stimulating the growth by influx of cash
through increased demand for goods and services.
g.

Cryptocurrencies

Bitcoin is one example of cryptocurrency.

Invented by Satoshi Nakamoto, A transaction is a
transfer of value between Bitcoin wallets that gets
included in the block chain. Bitcoin wallets keep a secret
piece of data called a private key or seed, which is used
to sign transactions, providing a mathematical proof that
they have come from the owner of the wallet. (bitcoin.org) Bitcoin is convenient for it allows people to send and receive money
around the world instantly, without the banks being an intermediary. Through the years, many businesses have accepted Btcoin
as a form of payment. Some of them are US Satellite TV provided Dish Network, Dell, charity institution like United Way, travel
booking site Expedia, online retailer Overstock.com and publications like The Drum and Chicago Sun-Times. NBA Sacramento
Kings also started to accept Bitcoins to buy tickets, jerseys, basketball and so on. Other cryptocurrencies who have followed the
idea of Bitcoin include Litecoin, Ripple, Peercoin and Dogecoin.
h.

Alternative Brand Currencies

i.

Pop up shops/ Social Media as Currency

Pop up shops like Birds Eye, Marc Jacobs, Weight Watchers, Yes Sir and Man Made London are using alternative brand
currencies to increase brand management and stimulate word of mouth. For example, while Marc Jacobs are launching their New
Daisy Fragrance, customers receive free perfumes by just posting their products in their Twitter or Instagram accounts with their
hashtags. In short, these work as promotional strategies for companies. Brands offer incentives in exchange for Facebook likes or
Instagram/ Twitter posts or follow.
ii.

Vending Machines

Aside from pop-up shops, Internet-connected vending machines are also becoming a fond of accepting social media
actions for payment. Brands like Hotwheels, Old Navy, Telus, Walkers and Westin are also in with the social media payment
scheme. Specifically, at the Canadian International Auto Show, Hot Wheels, together with Chevrolet, worked on the Camaromatic Trending Machine. To receive a special-edition die- cast Camaro, visitors just have to follow Hot Wheels Canada on Twitter,
enable location services on their mobile device and tweet the designated hashtag to the brand. On the other hand, Telus, as part
of its WWF-Canada Critter campaign, installed a vending machine in a Vancouver mall that have pandas in it. Shoppers who want
to have one will only have to tweet a particular hashtag and a unique code, every tweet is considered $1 of donation.
iii.

Branded Currency

Branded currency like that of Amazon Coins, eBay, Kik, and McDonalds Coins are paving its way in the markets and
giving consumers an easy way of buying and selling their products or merchandise. Aside from the coin itself, these companies
usually have a complementary application that consumers have to download in their phones for these to work. Some of the
advantages of this is the discount that is included when you use this.

III.

Challenges

Although these new forms of payment as well as currencies bring convenience to most people, it is still considered as
far from being perfect. Most of these technologies are subject to hazards like hacking or theft for information, be it personal or
details from ones credit card, and there is a little to no chance of recovering the stolen fund. More than theft, people are also
more likely concern about the potential fraud in these forms of payment. Moreover, Bitcoin are considered volatile in nature and
that theyre risky to use and too new to be secure enough. It is also subjected to potential unfavorable government intervention
and regulation. Having said this, all sorts of non- banking companies are considered important players in this new trend. They can
use this opportunity to grow their brand as well as speculate into more profitable venture of acting as financial intermediaries.
IV.

References

Baxley, D., Erickson, C., et.al. (2014) The Future of Payments & Currency. Retrieved June 9, 2015 from
https://www.jwtintelligence.com/wp-content/uploads/2014/10/F_JWT_The-Future-of-Payments-and-Currency_10.22.14.pdf
Cooper,
B.
(2015).
So,
What
is
this
Bitcoin
Thing?
http://www.mobilepaymentstoday.com/articles/so-what-is-this-bitcoin-thing/

Retrieved

June

9,

2015

from

Heggestuen, J. (2015) THE PAYMENTS INDUSTRY EXPLAINED: The Trends Creating New Winners And Losers In The CardProcessing Ecosystem. Retrieved June 9, 2015 from http://www.businessinsider.com/the-payments-industry-explained-2014-12
http://www.mobilepaymentstoday.com/