2014 Outlook: Payments Take Center Stage

Over this year, four key trends will propel the industry down the path to more efficient payments.

• The trickle-down effects of the Durbin Amendment: Retailers, banks and well- informed consumers will await the effects of the latest Durbin Amendment ruling to learn the extent of the costs and the long-term effects of implementation. In the meantime, retailers will begin to exercise their newfound control over making their own payment decisions. Merchants can now explore multiple unaffiliated networks to route transactions, and many will capitalize on this opportunity to own and leverage their customer data to encourage loyal and repeat consumer engagement.

• All eyes on EMV: While regulators push retailers to explore new payment methods, the card industry will continue to transition from magnetic stripe to chip-and-pin EMV cards.

• Renewed security focus: As the retail industry continues to gather and leverage customer data and comply with PCI standards, retailers will explore security measures like point-to-point encryption solutions and tokenization.

• Mobile payments take off: In 2013, the industry saw PayPal’s foray into card swipe readers and QR codes, and the Merchant Customer Exchange’s roster grow to more than 50 merchants. A clear winner of the POS race may not materialize this year, but mobile has emerged as a critical component of the purchase process.

During 2014, retailers will capitalize on shoppers’ comfort with mobility to engage consumers’ devices at the point of sale. Merchants see the inevitable path to mobile, and recognize that mobile payments will supply a trove of consumer data that can be leveraged to deliver real-time offers. While many have been waiting for a standardized mobile ecosystem to emerge, more retailers will dive into contactless payments this year and help establish best practices for the industry.

Lynn Holland is VP product management for ACI Worldwide, which powers electronic payments and banking for more than 5,000 financial institutions, retailers, billers and processors around the world.