The lines between banking and payments are at the same time being blurred and yet becoming wider. Payments may not be something that banks are a part of for long though the RBS poaching of MasterCard UK boss Marion King for its director of payments role indicates the banks are not bowing out yet, writes Billy Bambrough
Since RBS was forced to sell World Pay as part of its deal with the European Commission over its bailout in 2009 the bank has been understandably keen to retrieve a piece of the mass payments action. While it is unlikely the 81% owned bank will ever get back to the kind of influence it held through World Pay hiring ex-MasterCard UK president Marion King is certainly a step in that direction.
Banks around the world, and the card companies that right now appear so entrenched, are in very real danger of having the payments process whipped from under their feet as customers continue to be given more options from the likes of Transferwise, Apple Pay, and the retailers themselves.
According to Sky News:
"King will oversee the evolution of new payment platforms such as mobile apps and contactless payments as RBS aims to meet a stated target of becoming the leading bank for trust and advocacy among customers by 2020."
RBS here is admitting that mobile and contactless are the future of payments, and success in these areas are required in order to be seen as successful by customers.
RBS is no longer mourning the loss of WorldPay – it’s looking to move on
Contactless payments has had its best year since its inception in the UK, with usage up to 23.8m in June 2014 – a 7% increase on the previous month but up 226% over the same month a year before.
On top of this the roll out on the London Underground and bus network of contactless debit and credit card payments is furthering customer awareness of the initiative.
The banks and card companies are under pressure to pre-empt big retailers rolling out their own payment cards, able to give customers discounts and rewards if paying by store loyalty card. The big success in this space is Starbucks with its prepaid digital wallet, used in store either through a card or the mobile app.
The banks in the UK have decided that the best way for them to control the payments space end to end is through bank transfers running along the fast payments rails.
Through the P2P Paym and the P2B Zapp, payments will go back to basics, skipping the merchant acquirer completely and whole host of costs to the buyer and the seller.
Perhaps King has sensed that the wind is changing and MasterCard’s dominance is changing… or perhaps RBS has just offered more money.