The Future of Payments: How Tech Companies Are Disrupting Financial Services
Big tech companies are increasingly moving into the financial services sector, offering customers a range of payment and savings options.
- Apple has partnered with Goldman Sachs to offer a savings account, while WhatsApp and Twitter are exploring in-app payments. Instagram has also introduced payments in its direct messaging feature.
- Google has rebranded its payment service to Google Wallet, while Amazon Pay and Fitbit Pay offer customers advanced fraud protection technology.
- Traditional payment incumbents like Visa and Mastercard are responding by partnering with payment apps and fintech firms to stay competitive.
- Visa has partnered with PayPal and Venmo to launch ‘Visa+’, a new service to enable quick and secure money transfers between P2P digital payment apps.
- Mastercard is focusing on international expansion, partnering with fintech firms in the Middle East, and launching a Nordic project.
Big tech companies have been moving into financial services, with Apple offering a Savings Account backed by Goldman Sachs, Whatsapp launching payments in India and Brazil, and Twitter applying for US licenses to facilitate in-app payments.
The Twitter initiative is part of Elon Musk’s plans for a more functional app, which would replicate the success of China’s WeChat. This would give the company a competitive advantage in the global payments market. Instagram is introducing a new way for businesses to accept payments in their Direct Messages.
Customers can use Meta Pay to pay with a debit card, credit card or PayPal.
Google launches Google Wallet, Amazon Pay offers merchants the same trusted checkout experience as Amazon.com, and Fitbit Pay offers merchants the same advanced fraud protection technology used on Amazon.com, reducing chargebacks and bad debt.
Apple offers Savings Account backed by Goldman Sachs
Apple Card users can now grow their Daily Cash rewards with a Savings account from Goldman Sachs, offering a high-yield APY of 4.15 percent. With no fees, minimum deposits, or minimum balance requirements, users can easily set up and manage their Savings account directly from Apple Card in Wallet. Users can deposit additional funds into their Savings account through a linked bank account or from their Apple Cash balance, and have access to an easy-to-use Savings dashboard in Wallet.
Whatsapp payments in India and Brazil
Meta Pay on WhatsApp allows users to securely transfer money between friends and family and pay businesses quickly, simply, and securely. It supports debit, debit-enabled combo, or prepaid cards when sending and receiving money, and credit and credit-enabled combo cards when making purchases from businesses. WhatsApp is looking for more partners to help bring this feature to users across Brazil.
Twitter Applies for US Licenses to Facilitate In-App Payments
Twitter has taken steps to enable payments in the app, with the company applying for regulatory licenses in US states and international regulators to enable payments in all regions. This is part of Elon Musk’s broader plans for a more functional app, which would replicate the utility of China’s WeChat. Twitter is exploring options like Twitter Coins, unlockable tweets, paywalled video, and more, as it seeks to embed broader usage and adoption of in-app payments. Elon Musk has a keen understanding of the digital payments space, and is aiming to see Twitter bring in $1.3 billion in payment revenues by 2028. This would give the company a competitive advantage in the global payments market.
Instagram in chat payments
Instagram is introducing a new way for businesses to accept payments in their Direct Messages, giving customers a more personalized and convenient shopping experience. There are two ways to start accepting payments in chat: Visit your Instagram professional dashboard and tap Get paid in chat, or go to a Message with a customer and tap $. Customers can use Meta Pay to pay with a debit card, credit card or PayPal. Instagram is looking forward to giving people more access to tools like payments in chat that will make people’s lives easier.
No payments on Tik Tok yet…
Google launches Google wallet
Google Wallet launched in 2011 as a Nexus phone exclusive but failed due to a lack of NFC-enabled phones, a lack of retail partnerships, and consumer interest. Android Pay took Wallet’s place in 2015, and by 2018, both services had consolidated into the Google Pay brand. In 2022, Google rebranded its payment service to Google Wallet, with new features like driver’s licenses expected.
Amazon pay
Amazon Pay allows merchants to offer customers the same trusted checkout experience as they do on Amazon.com, without the need to create a new account or enter their personal information. It also offers a faster checkout experience, with up to 49% faster transactions than regular checkout and reduced cart abandonment. Merchants can enable features like recurring payments for loyalty and convenience, and Amazon Pay uses the AI and machine learning capabilities of Amazon.com to deliver secure checkout. Amazon Pay offers merchants the same advanced fraud protection technology used on Amazon.com, reducing chargebacks and bad debt. Customers can check out with confidence knowing their transaction is protected by state-of-the-art encryption and their data and personal information is secure. Merchant benefits include lower cart abandonment, reduced chargebacks, and fraudulent transactions, and leveraging Amazon technology.
Fitbit pay
Fitbit Pay is a digital payment system that allows users to pay at contactless payment terminals using their Fitbit smartwatch or fitness tracker. It uses near-field communication (NFC) and includes security features such as tokenization and a four-digit PIN. It is available on Fitbit smartwatches and fitness trackers,
How do the incumbents respond
Visa Partners With PayPal, Venmo, and Other Payment Apps to Launch ‘Visa+’
Visa has partnered with PayPal and Venmo to pilot ‘Visa+’, a new service to help individuals move money quickly and securely between different P2P digital payment apps. Visa partners DailyPay, i2c, TabaPay, and Western Union will also integrate Visa+ within their platforms. Visa+ will expand its reach and enable more use cases, including gig, creator, and marketplace payouts. Launch plans for US consumers in late 2023. Visa+ is a collaboration between DailyPay, i2c Inc., TabaPay, and Western Union to make Earned Wage Access available to everyone, everywhere.
Partners such as DailyPay, i2c Inc., TabaPay, and Western Union are excited to be part of the initiative. Visa+ will remove friction from the customer experience and make instant money movement easier for customers.
Mastercard makes a strong international push in the Middle East with initiatives in Kuwait, Egypt, UAE, Saudia Arabia, and a Nordic project launch. The company has multiplied its partnerships with local fintech firms and big tech Google
Kuwait — Partnership with Google
Mastercard and Google have collaborated to launch Google Pay in Kuwait, a digital payment system that saves customers from handing over their payment cards. It is made with a virtual card number and stored in Google Wallet, a digital wallet that securely stores payment cards. The launch aligns with the Kuwait Vision 2035 and the country’s digital transformation journey. Google Pay combines convenience with security to provide peace of mind. Mastercard cardholders can download the Google Wallet app or visit pay.google.com online to set up Google Pay. 64% of MENA consumers have increased their use of digital payment methods in the last year, and MasterCard has made a worldwide pledge to bring 1 billion people and 50 million businesses into the digital economy by 2025.
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Egypt — Partnership with Copal
Mastercard Incorporated and Copal have partnered to launch Egypt’s first family payment and expenses application platform, powered by Mastercard technologies. The platform users will be able to manage the funds of young members of the family, minimizing overspending and providing a cashless experience to the youth. Mastercard’s presence in Egypt is likely to be strengthened as a result of the tie-up, as the country is lucrative for global digital payment processors. Shares of Mastercard have gained 2.9% in the past six months compared to the industry’s 0.4% growth.
Saudi Arabia — Partnership with Saudi Payments
Mastercard has introduced payment flows, leveraging its MPGS technology, to upgrade online payment solutions across Saudi Arabia. The new solutions will automate payments and remove the need for payer presence on the website or app, leading to accelerated checkout experiences for consumers. Merchants that accept mada, the domestic payment network of Saudi Arabia — mada, which is operated by Saudi Payments, cards will enjoy reduced chances of fraud, higher approval rates, and lesser instances of preventable payment declines, and are equipped with the ability to save the mada card credentials of consumers. MA is aiming to capture the digital growth prospects of the Middle East region.
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UAE — Partnership with Jingle Pay
Jingle Pay, a UAE-based financial super-app providing money services, has announced a strategic partnership with Mastercard to provide innovative digital payment solutions that will drive financial inclusion. Through this partnership, Jingle Pay will launch physical and virtual cards to facilitate everyday transactions for people without a bank account. The UAE Federal Competitiveness and Statistics Authority reports that around 1.7 million people remain unbanked in the UAE. Jingle Pay is committed to extending digital financial services to the world’s underserved populations to improve security and equality. Jingle Pay is a UAE-born financial super-app that empowers users with a fast digital account, free of fees and zero commitments, to reliably store, spend, and send money to 160+ countries, in 99+ currencies, at the best exchange rates globally. It appeals to young ex-pat adults who regularly send their hard-earned money back to their home countries.
Sweden, Norway, and Finland — Partnership with Finaro
Finaro, the global cross-border payment provider and fully licensed bank has announced its European Cloud Commerce deployment with payments technology company Mastercard, Nordic neobank and POS provider Northmill, and leading full commerce enablement technology company NMI. Cloud Commerce is the next evolution in contactless payments, combining Tap on Phone, Pay by Link, and Click to Pay technology to make it easier for businesses to accept payments. Finaro will provide payment processing and acquiring services to enable Mastercard’s Cloud Commerce solution, for merchants who want to accept Tap on Phone payments on their eligible NFC-enabled devices. Northmill, Finaro, Mastercard, and NMI are partnering to bring Cloud Commerce to small and medium-sized merchants across the Nordics. This is a game-changer for businesses that want to provide a seamless, secure, and convenient payment experience. Finaro Vice President Ruben Frimand Nielsen believes this new offer takes Nordic payments to the next level.
Melvine Manchau — April 2023 — Views are my own