05-02-13 | Blog Post

2013 ETA Expo: Staying Ahead of Change in the Payments Industry

Blog Posts

Online Tech is exhibiting PCI hosting solutions at the 2013 ETA (Electronic Transactions Association) Annual Meeting & Expo at booth #1237. The conference will be held in New Orleans from April 30-May 2 at the New Orleans Convention Center.

Keynote: Big Change and Pocket Change: Staying Ahead of Change in the Payments Industry
Speaker: David Nelms, Chairman & CEO, Discover Financial Services

Key players in the card industry have left and become independent entities and brands. The payments industry has had the largest number of mergers and acquisitions of any other industry. Technology and regulations have also changed within the industry. Discover went from being a domestic network in 1998 to a global network by 2012. David encouraged others in the industry to welcome these kinds of advances across the board.

Global payments have nearly doubled in ten years from $17 to 36 trillion. Global card transactions have simply become a bigger slice of a bigger pie. The use of cards for transactions now outdoes the use of cash and checks combined.

He went on to discuss that change is the sign of a healthy industry and with change comes opportunity. The payment industry is not the first to experience such change. David compared  the television industry to the payment card industry. Over time, several barriers to entry were eliminated and new affiliates could ultimately go directly to the consumer, bypassing several channels.

Payments Value Stream used to look like the following:

  • Networks
  • Acquirers
  • Merchants
  • Consumer

As an industry, the payment industry is doing a good job of creating innovation, choices and added value for consumers. Consumers want ease of use, relevancy and security. New players, new technology and a lot of uncertainty are consistent components of the industry.

Big Trends Happening in the Payment Industry:

  1. Mobile technologies – Smartphones are the hub and center of the consumer’s universe. Phones will become way of payment at the point of sale. There will be battles over security and control.
  2. Physical Cards – Physical cards will still be with us for a long time.
  3. Commerce and payments are beginning to blend. Consumers are being offered more and more  ways to pay and the point of sale is going mobile.
  4. EMV is coming to the US
  5. Retail banking is moving from branches to internet and mobile.
  6. Information is more valuable and enabling. Consumers digital footprints are now moving to the cloud. Industry players are trying quickly to learn about consumers behavior and patterns based on that information.
  7. Partnerships are just as important as ever.

Discover wants to be the best partner in the industry. It is an alternative network for alternative payments in the US.  Discover is also partnering with other networks around the world.

David discussed some of Discover’s partnerships, some of which include PayPal and RuPay. Through partnerships, Discover is able to create benefits for consumers that include: complete financial flexibility, security and simplicity. For merchants, they offer simplified setup and new business.

The payment industry is growing and attractive. They have survived and are thriving as they move forward. The changes in the industry change rapidly whether it be from participants, technology, consumer behavior to regulations.

Key lecture takeaway:
Embrace change and look for ways to add more value.

David Nelms, Chairman & CEO, Discover Financial Services

David W. Nelms is Chairman of the Board of Directors and Chief Executive Officer of Discover Financial Services.  He is responsible for all Discover® branded financial services, including credit cards and banking products, including Discover Student Loans and Discover Home Loans; the Discover Network, a comprehensive payments network that supports multiple card products, issuers and processors; PULSE, one of the nation’s leading PIN debit networks; and Diners Club International, a global payments network.  He is also Chairman of Discover Bank, the issuing bank for the Discover card brands.

Before his appointment at Discover in September 1998, Mr. Nelms served as a Vice Chairman of MBNA America Bank.  Prior to that, he held management positions at Progressive Insurance, General Electric Company and in the consulting industry.

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