Prediction lists are everywhere this time of year and they often have more to do with sounding clever than sharing insight. So I hesitated last year when a colleague encouraged me to blog about key trends to watch for in the payments industry in 2013.
In the end, though, I had a lot of fun writing Looking Ahead to 2013. It was great to go on record with my thoughts about key trends affecting payments. And the blog prompted some fascinating conversations about how technology is transforming shopping experiences.
Last year I highlighted four “thought starters”—the continuing lack of adoption of NFC technology at the cash register; the merger of payments, loyalty programs, and coupons; the rise of mobile cash registers, and the beginning of location-aware, context-relevant shopping and payment experiences. The reality of 2013 wasn’t too far off… so I decided to give it another shot this year.
My job at PayPal gives me a unique opportunity to work with peers and strategize with partners across many industries about solving real problems and delivering exciting new experiences for consumers and retailers. That leads to a pretty privileged view into what’s coming next.
So here are my predictions for 2014:
1. Traditional retail fights back
In recent years, technology innovation from companies has disrupted traditional retail by making it easy for consumers to browse in a store and then buy online at the cheapest possible price. It’s a practice called “showrooming” and in-store merchants understandably hate it. This year, retailers will start leveraging and converting their retail footprint into logistical assets to enable shoppers to buy anywhere they want: in-store, on mobile, and on the web, and get fast-delivery, or pick-up in store the same day. Local will be more important than ever – and from our perspective we couldn't be more excited about innovations like PayPal Beacon which will transform the retail environment for your local main street by bringing back opportunities for personalized service all driven by mobile.
2. Mobile will transform commerce forever
If you work for a payment technology company, this prediction won’t be a surprise. But many consumers are just beginning to experience the freedom, flexibility, and fun of mobile payments and shopping, and they’re going to want more. This will lead to a flood of new payment experiences built on technologies such as sensors, geolocation, and the cloud that will soon make standing in a long checkout line and paying with a card seem like something out of the Stone Age.
3. iOS and Android will drive a retail revolution
Last year, I predicted the beginning of the end of the fixed-location cash register in favor of mobile checkout technology. In 2014, the entire retail infrastructure will follow suit. And why not! In less than four years since the launch of the iPad, tablets have become a fixture of our everyday lives. This year, they’ll become a standard tool in retail environments too, and merchants will use them for everything from Point of Sale to inventory, fulfillment, customer relationship management, and more.
4. Bitcoin will continue to gain ground (but not as a currency)
Bitcoin will continue to attract more people as a store of value and a speculative investment asset. I predict that the value of Bitcoin still has the potential to double (as of December 11, 2013 at 8:08 AM PT: 1 BTC = 915 USD) by the same time next year. But I believe it will have a hard time becoming mainstream as a currency, due to its expected continued volatility amidst regulation authorities and governments figuring out what to make of the cryptocurrency.
5. The year of disruption . . .
I love disruption—it’s when rules get broken and new ideas are born and tested that things get interesting. This trend has been gathering momentum over the last year or so as smaller players in the payments industry power a wave of startups that use mobile payments to fuel segment-transforming new business models. (Full disclosure: PayPal recently acquired Braintree, which provides the payment technology engine behind disruptive startups like Uber, Airbnb, and OpenTable.)
In 2014, you’ll see larger payments entities scramble to accelerate the pace of their innovation to catch up to these smaller and more nimble competitors. Meanwhile, smaller players will scramble to achieve the scale and experience needed to compete in a global business. As a result, billions of dollars will be at play in the payment industry, and 2014 will be a year of game-changing disruption.
6. . . . and consolidation in the payments industry
Our industry has a lot of players. Too many. No doubt there’s a ton of great innovation out there, but a lot of it works better in combination than on its own. And some of today’s bright young firms will never achieve the scale to survive without joining forces with someone bigger. This will lead to a wave of acquisitions in 2014. Meanwhile, new alliances will create intriguing partnerships that span payments, retail, and more. It simply won’t be the same industry in 12 months that it is today.
So that’s where I see payments headed in 2014. If you think there are other trends that I missed, I’d love to hear your thoughts. And whether you agree or disagree with my thought starters, I think we can all agree that this industry is in the midst of incredible and exciting change right now. It’s going to be an amazing ride over the next 12 months.