2. Cloud-Based Payments: Will Banks Bite?
PayPal and other nonbank payments providers have jumped at cloud-based payments. Will banks try to gain benefits in payments security and flexibility with the cloud?
The NFC-versus-cloud debate around mobile payments has been a hot topic over the last couple of years, but the debate is misguided, says John Lunn, PayPal's director of developer relations. While PayPal has very publicly pursued a cloud-based approach, the prize for PayPal isn't getting people to pay with their mobile devices at the point of sale.
"Just making a mobile payment at the point of sale is pointless. Cards work fine," Lunn states.
Instead, much like banks, PayPal's aim is to deepen its customer relationships by enabling customers to pay anywhere and however they wish, and that's where the value in cloud-based payments can be found, Lunn insists. That means looking beyond the mobile device to a payments environment where consumers each have numerous devices with which they can make payments.
"We believe that in the future consumers are going to shop from many devices: their smart TVs, their laptops, their PS3s. Our goal is to make payments easier by centralizing account info across those devices," Lunn says.
Moving to such a model enables certain benefits for payments companies and their customers, explains Matthew Friend, a managing director of Accenture Payments Services, North America. The cloud can help standardize security across different devices. For instance, customers can use their online login credentials to authenticate at the point of sale, he points out.
"It will be interesting to see if over the next couple of years financial institutions start to adopt a cloud-based payments model," Friend adds.
Friend may not have to wait long. In August, Royal Bank of Canada announced it will launch RBC Secure Cloud, a cloud-based mobile payments service for retail consumers, later this year. RBC noted that it will be better able to ensure security of customers' account information by keeping it with the bank in the cloud than if it were on a mobile device, and said the service is flexible enough to enable payments with near field communication, QR codes and offline transactions. Whether other banks are enticed to a cloud-based payments model by such benefits remains to be seen. — Jonathan Camhi
Jonathan Camhi has been an associate editor with Bank Systems & Technology since 2012. He previously worked as a freelance journalist in New York City covering politics, health and immigration, and has a master's degree from the City University of New York's Graduate School ... View Full Bio