The Money Revolution

Do you remember the days of the cash register?

Technological advances have led to changes in our behavior when it comes to most of the ways in which we live our lives, and they’re now beginning to impact established methods of payment. This means that in the foreseeable future many beloved products, like the cash register, will most likely be going out of use. Sights like a ‘cash only’ sign on a cab interior are hopefully becoming a rarity as companies like Uber with their automated payment process begin to emerge as a new take on the traditional taxi.

At this stage we don’t know which innovations will dominate the world of currency exchange, be it bitcoin or some other virtual barter system, but it is possible to predict which existing components will remain. Intelligence from the Business Insider has recently focused on the bigger picture of the credit and debit card ecosystem.

In a recent report they looked at the complicated series of interactions among different legacy players that powers each credit card payment. They then outlined the six types of companies that play key roles in the credit payment chain, they explained what each player does, and how much value they add. They also explained why two parts of this chain – the hardware providers and the merchant service providers – are particularly vulnerable to disruption.

They identified that credit card companies like Visa and Mastercard, and credit card processors like First Data, are safe because their role is one of simply enabling the transfer of funds from one place to another. The makers of hardware related to current physical payments in stores, however, are most vulnerable to changes in the system.

This should come as no surprise, as shops evolve to take payments via iPod and iPad, Visa and Mastercard still process the payment. Apple have managed to slimline traditional cash registers which have been in use in more or less their current form since the late 1800s, but their role is still one of producing innovative hardware rather than changing the basic nature of payment transactions. But the curve has been sketched, and for the most part we all know where it’s headed.

What about removing the concept of going to the checkout all together?

Interestingly, Apple, while leading the way in iPod and iPad transactions in their stores, are disrupting the way we do things by allowing customers to self-checkout via iPhone. Using their app EasyPay, a customer can scan a product’s bar code with their iPhone camera and enter their iTunes password, the app then uses iOS’s location features to pinpoint their location and the store so that the correct sales tax can be applied.

This kind of payment innovation makes the transition between paying via credit/debit card and paying via internet-based currency only too easy.

Will accepting credit cards via your iPhone be the next MiniDisc?

These card systems address the current need to take payments from credit cards in the same way that MiniDisc solved the need for portable music before the iTunes world came along… Will the industry see another disruptive transaction entirely when the internet can enable a different kind of transaction in store?  The technology is there, all that remains is to implement a monetary system that works and that can co-exist with our current economic framework.