Today, just a week after Apple unveiled a mobile service that seeks to eliminate the credit card, Nitish Kannan will roll out a new payments technology that would be completely useless without that familiar piece of plastic we carry in our wallets.
Kannan is the founder of a year-old startup called Circle Payments Plus that lets small businesses accept payments from credit cards via a smartphone camera---no additional hardware required. At first blush, the company's technology seems to have arrived at just the wrong time. But Kannan doesn't see it that way. And he's right.
Apple Pay---a service that lets you pay for stuff both in stores and online using your iPhone---is certainly the biggest threat yet to the old fashioned credit card. It's available to anyone on the latest iPhone, and you can set the thing up simply by pointing it to the credit card number you've already stored on Apple's iTunes service. For many pundits, this is the service that, unlike similar tools from PayPal, Google, and others, will push mobile payments into the mainstream. But a little perspective is required here.
"The adoption of mobile payments is going to be an evolution, not a revolution," says Denee Carrington, an analyst with research house Forrester Research who tracks the digital payments market. "Even if Apple Pay does incredible well, in the grand scheme of things, it will still be just a drop in the bucket." According to Forrester's projections, spending via mobile services in U.S.---including not only Apple Pay but all other services---will reach $90 billion over the next three years. That's a lot of money. But it still represents less than one percent of all consumer spending in the U.S.
In other words, there's still a huge opportunity for services like Circle Payments Plus, a mobile app designed as a way for, say, street vendors to accept credit card payments through their own phones and tablets. Circle is kinda like Square, except businesses needn't plug their phones into a physical card reader. Kannan says the service will be particularly attractive once chip-and-pin cards hit the U.S. If a merchant uses Square, it will need new hardware to accommodate chip-and-pins. But in most cases, Kannan says, Circle will continue to operate as it does today.
He also says that the service also lets merchants more easily set themselves up to accept payments and that, on the whole, it sends payments into their bank accounts more quickly. They can tie the service into their bank account merely by scanning their own debit card. There are still many questions over how well the service works---and how secure it is. But the larger point here is that, if it does what Kannan says, it can find a place in what will be a vibrant credit card universe for years to come.
The same holds for Square, which is apparently on the verge of raising a fresh $100 million to funding to continue its credit card-dependent mission. "There is still a huge opportunity for a variety of players," Carrington says. The greater issue for these companies, including Circle, is that there are so many of these players. But one thing is for sure. The credit card is a long way from dead.
