Jon MacAllister of Dorado Industries offered his vision of Payments 3.0 at the 2016 Credit Union National Association Payments Roundtable Wednesday in Salt Lake City.
Among the most notable changes will be the integration of payment functions such as person-to-person, bill pay and mobile point of sale into single-branded solutions, MacAllister said.
MacAllister said each of the current single-function solutions will seek more to become more robust to remain relevant. “In order to diversify from the endgame that is going to ultimately hit all of them and remain a player in this market, they will merge into each other’s space to create extensive integration in their product suites,” McAllister said.
MacAllister said that integration combined with the Internet of Things--the networking of physical objects, such as vehicles and appliances to the Internet--will also make other channels irrelevant. “Channel differentiation and service differentiation is going to go away,” MacAllister said.
On the downside, the value of payments will become diluted as they become integrated with the Internet of Things. “We have to find a different way to compete,” MacAllister said. ‘We have to offer something different to the industry. If not, our transactions are going to be intermingled with everyone else’s transactions and we’re just going to lose value.”
MacAllister said the U.S. will have at least two faster payments solutions: one managed and led by the Federal Reserve and another controlled by the biggest banks. “The Fed is going to have to do something for smaller financial institutions who are not willing to pay the freight in the big banks network,” he said. “It is highly likely that a new payments mechanism controlled by the big banks will cause small financial institutions to pay the freight for clearing transactions.”
MacAllister also said the use of PINs will soon give way to facial recognition, clearing the way for end of the plastic.
MacAllister offered a credit union preparation checklist for the Payments 3.0: