De La Salle University

Ramon V. Del Rosario College of Business

Financial Management Department

New Trends in Payment System

In partial fulfillment of the requirements for

BAMAFIN M71
Submitted To:
Dr. Frederick Romero

Submitted By:
Pauline Sombillo
11200014

June 9, 2015
I.

Background

Money is always only a human creation, kind of a collective illusion. Its something we invent as
societies and states and communities, and we can reinvent it if we want to. - Bill Maurer, Dean of
Social Sciences $ Professor, Anthropology and Law, UC Irvine
Nowadays, technology is opening up myriad possibilities of new payments and forms of currency such
as the mobile wallets and cryptocurrencies. Skeptics say consumers have little incentive to adopt new
systems, but Millennials are more open to these kinds of new and alternative ideas. For them, it is not
enough and it doesnt make sense that they would still rely on cash, debit and credit cards for
payments. Aside from the positive feedback of the Millenials on this innovation, there are a number of
negative drivers that can account for the rise of these trends like distrust in financial institutions, and
data breeches. Aside from these, new forms of currencies are considered hedge against economic
chaos. It helps protect consumers and local businesses from economic downfall like sudden inflation.
There are so many advantages to going to electronic, including the germs on cash, the cost it takes
to manufacture the cash, to print it and secure it, and then to recycle it. Its just a very old-fashioned
thing. Its going to take probably hundreds of years to totally eliminate cash, but as with checks, well

see a gradual decline in the use of cash in favor of all these alternatives. It doesnt really matter what
the alternative is. It could be anything; in the future, its a cloud. [The alternatives are] all
interoperable with each other. - DEBORAH BAXLEY, card payments expert, Capgemini
II.

Latest Trends
a. Mobile Wallets

Basically, Mobile Wallets made use of various technologies like Near Field Communication
(NFC), Bluetooth, and Bar Code Systems. Mobile Money services allow users to access financial
systems using their cellphones. This has been prevalent on developed countries like Japan and Europe,
wherein people is used to paying for their purchased goods and services using their smartphones.
i.

M- Pesa

M- Pesa is a mobile phone based money transfer and

microfinancing service launched in 2007 by Vodafone for Safaricom and
Vodacom. Over the years, Vodafone is constantly growing that it already
handles more than $1 Billion of transactions every month in Kenya alone
and has expanded its services in 10 markets, including India and
Romania. It provides services like deposit, money transfer, and payment
for goods and services to consumers.
ii.

Alipay Wallet

Alipay Wallet is Chinas Alibaba affiliate, which allows users to transfer money, pay bills, and
make micropayments such as buying a snack at a vending machine. It has been considered a leader in
mobile payments worldwide in 2013 for processing over $150 Billion.
iii.

Apple Pay

Using Near Field Communication (NFC), Apple Pay let users make
payments at retail and online checkout wirelessly. It does not require Applespecific contactless payment terminals and will work with Visa's PayWave,
MasterCard's PayPass, American Express's ExpressPay and other large banks
terminals. Because of the back- end technology and touch to authenticate
features, it is entirely safe and secure compared to other mobile payments.
iv. Kuapay
Based in California, Kuapay is a payment service
provider that combines digital wallet and mobile
payments. The Kuapay system allows consumers to
present a one-time QR code at the point of sale. Credit
card information is not transmitted in the QR code,
increasing safety. The system also includes location-based
coupons and loyalty marketing. This one-time mechanism increases security over presenting a credit
card number.

v. Peer to Peer Payment (P2P)

P2P transactions are usually done through mobile applications, making around $1 Trillion
annually. Some services, including Dwolla and Ribbon, encompass both consumer transactions and
peer-topper payments. Dwolla allows users send money to email addresses, phone numbers LinkedIn
connections, Twitter followers and businesses that accept it. Others include Paym and Venmo, which
allows consumers compensate their friends and family.
b. Branded Apps
i.

Starbucks

The application has nearly 12 Million users and almost 15% of its
total revenue are generated from this. Basically, it include Peer to Peer
Payment (P2P) gifting, and digital tipping, and Starbucks is planning to
add a feature of ordering en route a store.
ii.

Current C

Two years ago, Merchant Customer Exchange (MCX) was formed

by Americas biggest retailer brands like Walmart, 7-Eleven, Best Buy,
which aims to directly impact the way the world will transact tomorrow.
Customers will be able to pay using MCXs CurrentC app, and merchants can also integrate its
payments and loyalty functionality into their own apps. MCX is testing CurrentC in selected locations
around the U.S. and plans to completely expand on the 2015.
iii.

Supermarket and Fastfood Apps

MyWebGrocer is the most well known Grocery App in the US while supermarket chain Coles is
paving its way in the Australian market. Other supermarkets that enable mobile payments include
Netto, owned by German chain Edeka; Tesco, which is piloting an app named PayQwiq in the U.K.; and
Harris Teeter in the U.S. For the Fastfood Applications, these applications are perfectly fitting for the
Millennials, which are more of working on a fast- pace than the traditional or old ones. Some of the
fastfood chains that offers mobile app payment include McDonalds, KFC, Pizza Hut, Burger King,
Wendys, and Subway. The most prominent technology provided are white-label solutions like LevelUp
and Paydiant, which let fast food and other merchants create branded apps on top of their software
platforms. LevelUp is also integrated into the Apple Pay system.
c.

Wearables

Glasses, watches and wristbands are just some of the wearable

devices that is commonly associated with payments for convenience. For
instance, Glasspay works through scanning in store items using Google
Glass and paying with a bitcoin wallet. Other companies that are into Glass
Payments are Mastercard, LevelUp, Dwolla, and Intuits GoPayment.
On the other hand, watches like that of Samsung Gear 2 are also
coming handy nowadays, whereby users just tap their watch
interface. Lastly, the use of wristbands are more frequent during
concerts and music festivals. Also, Disney started to make use of
this, particularly the RFID enabled MagicBand, to let their
consumers make contactless payments. Lollapaloozas RFIDenabled Lolla Cashless bracelets let party goers at the Chicago fest
buy refreshments and merchandise by simply scanning their wrists
and entering a PIN. PayPal introduced similar bracelets to VIPsection guests at Spains Low Festival and Barclaycard bpay was
then tested at Londons Pride event and some summer concerts.
d. Biometric Payment
Of course, when it comes to biometric payments, fingerprints are the most
widely used physical characteristics or security system which enable businesses
identify and authenticate a persons identity. Fingerprint features are usually
embedded on Apple Pay systems and Samsung Galaxy S5. Other physical
characteristics include iris lens, voice prints, facial maps, and even vein patterns like
what Swedish startup Quixter and Biyo, formerly known as PulseWallet did. Biyo uses
Fujitsus PalmSecure technology and relies on a credit card terminal that integrates an
infrared palm reader; the device was released in the U.S. in February. Quixter says
payment takes just five seconds with its system. Currently its being tested at a Swedish university
campus.

e. Emails, Texts and Tweets

Micropayments between people by emails, texts and tweets are pioneered by PayPayl in 1999
and is later on adapted by Amazons TextPayMe, Obopay, Square, and Google, which enables people to

make person to person payment, bill payments and product purchases via simple message. The text
message system is widely used during the previous Haiti Earthquake, wherein they were able to gather
a total of $43Million through text as donations.
f.

Non- Fiat Currencies

Because of economic crisis and rising income

inequality, non- fiat currencies are currently on the rise. For
instance, dozens of local currencies circulate in Brazil, and in
the UK, Brixton and Bristol Pound recently launched mobile
payment apps, and the city of Hulls Hullcoin, a digital
cryptocurrency that works like Bitcoin. Local US currencies
include Equal Dollars in Philadelphia, BerkShares in
Massachusetts, Ithaca Hours in New York, and COjacks in
Colorado. All of these will help minimize the impact of and
economy on a downfall, through stimulating the growth by
influx of cash through increased demand for goods and
services.
g. Cryptocurrencies
Bitcoin
is
one
example
of
cryptocurrency.
Invented
by
Satoshi
Nakamoto, A transaction is a transfer of
value between Bitcoin wallets that gets
included in the block chain. Bitcoin wallets
keep a secret piece of data called a private
key or seed, which is used to sign transactions, providing a mathematical proof that they have come
from the owner of the wallet. (bitcoin.org) Bitcoin is convenient for it allows people to send and receive
money around the world instantly, without the banks being an intermediary. Through the years, many
businesses have accepted Btcoin as a form of payment. Some of them are US Satellite TV provided
Dish Network, Dell, charity institution like United Way, travel booking site Expedia, online retailer
Overstock.com and publications like The Drum and Chicago Sun-Times. NBA Sacramento Kings also
started to accept Bitcoins to buy tickets, jerseys, basketball and so on. Other cryptocurrencies who
have followed the idea of Bitcoin include Litecoin, Ripple, Peercoin and Dogecoin.
h. Alternative Brand Currencies
i.

Pop up shops/ Social Media as Currency

Pop up shops like Birds Eye, Marc Jacobs, Weight Watchers, Yes Sir and Man Made London are
using alternative brand currencies to increase brand management and stimulate word of mouth. For
example, while Marc Jacobs are launching their New Daisy Fragrance, customers receive free perfumes
by just posting their products in their Twitter or Instagram accounts with their hashtags. In short, these
work as promotional strategies for companies. Brands offer incentives in exchange for Facebook likes
or Instagram/ Twitter posts or follow.
ii.

Vending Machines

Aside from pop-up shops, Internet-connected vending machines are also becoming a fond of
accepting social media actions for payment. Brands like Hotwheels, Old Navy, Telus, Walkers and
Westin are also in with the social media payment scheme. Specifically, at the Canadian International
Auto Show, Hot Wheels, together with Chevrolet, worked on the Camaro-matic Trending Machine. To
receive a special-edition die- cast Camaro, visitors just have to follow Hot Wheels Canada on Twitter,
enable location services on their mobile device and tweet the designated hashtag to the brand. On the
other hand, Telus, as part of its WWF-Canada Critter campaign, installed a vending machine in a
Vancouver mall that have pandas in it. Shoppers who want to have one will only have to tweet a
particular hashtag and a unique code, every tweet is considered $1 of donation.
iii.

Branded Currency

Branded currency like that of Amazon Coins, eBay, Kik, and McDonalds Coins are paving its
way in the markets and giving consumers an easy way of buying and selling their products or
merchandise. Aside from the coin itself, these companies usually have a complementary application

that consumers have to download in their phones for these to work. Some of the advantages of this is
the discount that is included when you use this.

III.

Challenges

Although these new forms of payment as well as currencies bring convenience to most people,
it is still considered as far from being perfect. Most of these technologies are subject to hazards like
hacking or theft for information, be it personal or details from ones credit card, and there is a little to
no chance of recovering the stolen fund. More than theft, people are also more likely concern about the
potential fraud in these forms of payment. Moreover, Bitcoin are considered volatile in nature and that
theyre risky to use and too new to be secure enough. It is also subjected to potential unfavorable
government intervention and regulation. Having said this, all sorts of non- banking companies are
considered important players in this new trend. They can use this opportunity to grow their brand as
well as speculate into more profitable venture of acting as financial intermediaries.
IV.

References

Baxley, D., Erickson, C., et.al. (2014) The Future of Payments & Currency. Retrieved June 9, 2015 from
https://www.jwtintelligence.com/wp-content/uploads/2014/10/F_JWT_The-Future-of-Payments-andCurrency_10.22.14.pdf
Cooper, B. (2015). So, What is this Bitcoin Thing? Retrieved
http://www.mobilepaymentstoday.com/articles/so-what-is-this-bitcoin-thing/

June

9,

2015

from

Heggestuen, J. (2015) THE PAYMENTS INDUSTRY EXPLAINED: The Trends Creating New Winners And
Losers
In
The
Card-Processing
Ecosystem.
Retrieved
June
9,
2015
from
http://www.businessinsider.com/the-payments-industry-explained-2014-12
http://www.mobilepaymentstoday.com/