Mobile 2 Go Blog: Iconic Credit-Card Brands to Vanish?
New wave of secure mobile transactions likely to bypass Visa, MasterCard
OAKBROOK TERRACE, Ill. -- A trade-show exhibit-floor conversation about the future of MasterCard and Visa a few months back led to talk of obsolescence. I know, the mere thought of such iconic brands going the way of Diner’s Club, Woolworth’s and Tab sounds unfathomable.
Of course, this would only be conjecture and supposition—let’s not suggest such talk in any way would be a prediction based on established trends. But let’s just suppose …
I recently tracked down one of the people in that show-floor discussion and asked that he walk me through the scenario as he sees it. He’s Rick Dakin, CEO and cofounder of Coalfire, a data-risk assessment firm based in Louisville, Colo.
His story starts with what has been in the news of late: data breaches. Target, Neiman Marcus, Michael’s and in our channel, RaceTrac, are just a few in a recent slew of breaches affecting millions of card holders and unleashing a flood of potential fines and audits.
Many believe this will fuel demand for a new, more secure payment infrastructure. But Dakin doesn’t necessarily believe it will be what the credit-card companies are mandating, which is “chip and PIN” technology. He describes that as a dated strategy.
“There’s a whole new wave of highly secure transaction processing coming to market that doesn’t happen to go through Visa or MasterCard,” Dakin said. “Chip and PIN will lock the merchant to [MasterCard and Visa] because they decrypt the data.”
In addition, the c-store channel just underwent a $4 billion upgrade to current data-security standards and is reluctant to invest in the new chip-in-PIN solution.
If alternative technologies that use cellphones can identify a customer and direct the transaction to a payment method that’s not Visa or MasterCard, saving the merchant the 2% transaction fee, then why wouldn’t retailers move in that direction?
In his opinion, Dakin believes the credit-card companies are “hijacking the conversation” by forcing the chip-in-PIN technology on retailers and not allowing the alternatives equal play.
“The thing is to involve banks, retailers and the credit-card companies,” Dakin said. “Ask: How do you want things to work? Don’t hijack the discussion and force a solution that’s uniquely valuable to one [segment] of the path.”
What Dakin seems to be saying is the road to obsolescence is paved with that kind of immovable stone. Iconic brands fall when they fail to change, fail to be inclusive, when the majority turns on them and declares them irrelevant.