Digital Wallets Could Be a Gold Mine for Credit Card Companies

The migration from a physical to a digital wallet could be a windfall for credit card firms, given the strong possibility that digital wallet providers will have to work with the major payment networks, thanks to the networks’ ubiquity, security, speed, and difficulty of replication. MasterCard’s Mario Shiliashki predicts opportunities in the digital wallet space will help the company top its past business growth rate over the next three decades. Experts agree that plastic cards will eventually become outdated, but first digital wallet providers will need to give consumers a compelling reason for giving up the cards. Moreover, the card networks will likely flourish with the switch, since providers rely on the networks for transaction settlement. Some of the largest networks are eager to stake a claim in this emerging market, with Visa and American Express going so far as to launch their own products. Furthermore, nearly all credit card network providers are engaged in behind-the-scenes activities so that tech companies, carriers, and handset manufacturers can more easily interface with their payment networks. “In a world that is increasingly offering an omnichannel shopping and payment experience, whether it’s online or in the aisle of the store from a mobile device, we want to offer them the tools to make those payments easy to connect to our network,” Shiliashki says.

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CNet (03/07/13) Reardon, Marguerite