The payment industry has a unique perspective into the total economic recovery process in the US. With all this data flying around about who's spending what and where, we have some meaningful trends to note and certainly some cautionary tales for professionals looking ahead into the coming year.
Recently little credit has been available, and even businesses that could expand with a signature loan are not able to obtain the funding needed to shake off this recession. Many credit institutions have moved from weeding out the bad apples to restricting even those customers that use credit responsibly. What's a business owner to do?
It may not even matter. Some analyses project unemployment to drop from 9.6% to a whopping 9.1% by the end of the year, there may not be a lot of opportunity or new markets to find additional revenue anyway. The does lie opportunity, however, in what's coming down the pipe, and we may not have even heard of the sources of revenue from which we'll be profiting by the end of the year.
For example, Verizon Communications, Inc., AT&T Inc., and T-mobile USA Inc. have announced their new mobile payments network called Isis. Partnering with Discover and Barclaycard to provide the infrastructure for the network, many companies are scrambling to understand the broader implications of this new type of payment. With mobile payments already a growing fad in the payments industry, the network would allow a more robust and secure payment platform by waving your mobile phones in front of a terminal. The phones would use a new communications technology called Near Field Communication (NFC) which allows the phones to share information with other devices within a certain proximity.
Also, electronic payments eclipsed all other non-cash payment alternatives in 2009. Electronic payments have been growing by 9.3% annually since 2007, and of all non-cash payments, since April of 2009 more than three-quarters of those transactions were made online. Businesses have much to celebrate and much to fear.
With these kinds of changes in the payment processing industry, we can imagine all sorts of new markets opening up, or new buying habits for which our current businesses have not yet prepared. What if you were a bakery and could forego the expense of a retail storefront by selling your goods via e-Commerce and delivery to a certain radius from your store. What you save in prime real estate rent expenses you could put into delivery vehicles that can take payments at the point of delivery. At least you have your marketing driving all over the city everyday. Many grocery stores are already doing this. e-Commerce doesn't necessarily mean out of town.
If your business model does not account for online payments and e-commerce, you're missing out on a big piece of the pie. Of course, context is everything, but if you do see your business expanding out of it's current geographic market, the most efficient solution lies in e-commerce and mobile solutions. If consumers want to spend, and they want to be able to do it at the most convenient place and time possible. e-Commerce solutions can get you in the right place at the right time.
We've only uncovered the tip of the iceberg when it comes to forecasting 2011. The message is have hope, be creative and look forward with great anticipation. Just because you don't know where your sales are coming from in the new year, doesn't mean they're not coming. Be open to the changes and ride the waves. The tide will take you to the party.
Matthew Koren is the President of Priority Payments Northwest, a Merchant Services Provider located in Portland, OR. He runs his company in addition to his management consulting practice as an Associate with Causeit, Inc. You can contact him by filling out the Contact Us page, or by calling 866-402-1485.