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The payments industry is always changing

February 17, 2015

The payments industry is a constantly shifting landscape - strategic partnerships are concluded, new products are continually introduced to the market and consumer buying patterns change. From the way people use credit cards to how mainstream mobile payments are expected to become, markets always evolve.

The payments industry is a constantly shifting landscape – strategic partnerships are concluded, new products are continually introduced to the market and consumer buying patterns change. From the way people use credit cards to how mainstream mobile payments are expected to become, markets always evolve.

Costco and Amex are breaking up
CBS News reported that American Express is ending its partnership with Costco Wholesale. American Express was unable to reach an agreement with Costco on renewal terms. The agreement between the two companies allowed members of Costco to use American Express cards at stores and enjoy exclusive benefits. The deal with the credit card company provided Costco with a significantly lower rate than other retailers, however, the deal will conclude at the end of March 2016. A spokeswoman for the company indicated that a similar deal for Costco’s Canada stores ended last year as well.

This recent turn of events is a reminder that nothing in the payments industry is permanent. It is unclear whether Costco will look to sign a deal with another credit card company or rely on mobile payments as an alternative, but both companies will surely thrive regardless.

Mobile payments will have a big impact on consumerism
According to Forrester Research, mobile payments will grow from $52 billion in 2014 to $142 billion in 2019, reported Skift. It is relevant to add that 66 percent of consumers in the United States have smartphones capable of making mobile payments.

Skift noted that smartwatches will help transform the payments industry as well. Wearable technology is expected to receive a strong endorsement from consumers and the Apple Watch will make the company’s mobile payment service more widely available.

The news source also predicted that the travel industry will benefit greatly from developments in the payments space. As more consumers carry smartphones when they travel, airports, airlines, hotels and attractions will rely more heavily on mobile payments as a way to offer products and services. It will be more convenient for travelers to forego frequent trips to currency exchanges and instead use their phones to pay for things.

Other smartphone makers will compete with Apple
PYMNTS reported that Samsung will introduce its own mobile payment system, which will come along with the Galaxy S6. The service is meant to compete with Apple Pay and will use a fingerprint sensor for transaction authentication, versus swipe-based authentication on older models. Samsung is known as a dominant player in the Android market, but the company is positioning itself to be viewed more like Apple than other phone makers. Interestingly, Samsung’s mobile payment service appears to not rely on near field communications like Apple Pay does, and will transmit transaction information using other methods.

Ultimately, it is clear that as partnerships with credit card companies end, smartphone adoption rates get higher and mobile payments become more widespread, the only permanent thing in the payments industry is change. Retailers will upgrade their point-of-sale devices, technology companies will unveil new services and consumers will embrace new ways of making payments.

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