MasterCard and Visa are two of the biggest card transaction processing companies in the financial world. These two companies have such a strong hold in the industry that it is difficult for competitors to defeat them in competition. This is what most of us like to believe.
However, today there are people who are willing to take on the challenge and test these waters. Bloomberg, on Monday, reported that AT&T and Verizon are in discussions with Discover Financial Services to start a program that will compete with the two major financial conglomerates, MasterCard and Visa, by allowing customers to pay for their purchases using their cell phones rather than the traditional way of swiping the card.
Does this mean the MasterCard and Visa should feel threatened with the new developments? Well, not really!
While conceiving a product idea is relatively easy, executing it to perfection without hassles is a totally different ball game. While AT&T and Verizon may be able to come up with an effective system to transact using mobiles, ensuring that the various business entities and consumers accept the new system poses the real challenge.
It is the business and end customers who hold the key to the success of this system. If the new system that is being developed has to be a success, it has to be easily accepted by these two entities simultaneously. Assuming just the business entities adopt it, but customers are not really happy or if the system appeases the customers, but fails to meet the demands of the business units, the entire effort will fall flat on the face. Considering the MasterCard and Visa have been accepted by the current league of business units and customers alike, it is going to be a herculean task to develop a new system that can compete with these financial bigwigs.
The reason for these two companies to thrive successfully in the United States is the fact that the country believes better in electronic transactions as compared to cash transactions. Hence, in countries where cash transactions are preferred, the mobile payment system will prove to be a hit. However, not in the United States where people are averse to using cash for transactions.
In the United States, almost all transactions that involved cash payments have migrated to the electronic system of making payments. Hence, it is going to be difficult to break this barrier and adopt the mobile payment system once it has been developed.