Mr Zwahlen, you work on the financial services of the future. Can you tell us how we will be making payments in years to come?
One thing is for sure: cashless payments will account for the majority or even all of our payments. When it comes to digital goods or online purchases, we will no longer even be aware of the actual payment process. This will disappear into the background. In future, we will only have to identify ourselves when we make payments, initially still actively. In the long term, however, this step will also disappear, as we will then be identifiable on the basis of our presence and behaviour alone.
What does a mobile payment solution need to offer in order to conquer the market – and maintain its position in the long run?
Every new solution and every new product needs to solve a problem. This may be an existing problem or an issue that is only emerging now. Or it must generate a benefit. An example: prior to Paymit and TWINT, transferring money from person to person in Switzerland was a very time-consuming task. I had to exchange account numbers and addresses and wait at least one day until the transaction was executed. It was the same in e-commerce: the payment process with credit cards is still not convenient enough. Paymit and TWINT solved these problems. And thanks to TWINT, it is now also possible for online payments to be debited directly to a bank account. Making payments in shops is now no problem in Switzerland. Contactless payments using your card are already very convenient and quick. However, this observation only relates to the payment process. In the long term, mobile payments will only survive as part of an ecosystem in which I can otherwise interact and make purchases or procure services. An isolated payment solution will not prove successful. It needs additional benefits.
What are you observing on the global market in this regard? Which solutions do you think have a good chance of success?
The most successful mobile payment solutions in the US are the mobile app of Starbucks and the Venmo peer-to-peer solution (used to transfer money between private individuals) of PayPal. With the Starbucks app, I get certain benefits compared to an equivalent customer, as I can, for example, order my coffee in advance and pick it up directly upon arrival. This simplifies the process considerably and saves time.
Venmo, on the other hand, is not only a payment solution, but also a messaging app with a social component. The app includes a news feed in which I can see the messages of all my friends relating to payments. Some 40% of the app’s usage can be attributed to the chat function and the viewing of messages.
Asia, and China in particular, is already the global leader in the field of mobile payments. In China, it is now possible to pay almost anywhere and via all channels using AliPay and WeChat Pay. In major cities such as Hangzhou, it is possible to live in a completely cash-free manner. Mobile payments are not only used to make shop purchases, but also to pay the rent or electricity and health insurance bills.
How do you assess the chances of TWINT?
TWINT has an excellent starting position and comparable situations within Europe are to be found: the banks have agreed to a common standard and the major retailers as well as a relevant number of small merchants accept TWINT. Ultimately, however, it will be the users who decide whether the solution proves a success or not. It is therefore important that TWINT does not only limit its offer to payments, but rather further broadens its horizons, becomes integrated in third-party applications and itself develops a large ecosystem with partners from outside the financial sector.
A look into your crystal ball: what will the challenges of the future be in the area of payments?
I believe that budget control will in future be the only challenge that consumers have to contend with: making payments will be so easy that you will no longer even realise you are doing so. It will no longer be possible to take a look in your wallet or purse and check how much money you have available. Of course, there are also digital mechanisms that simulate this, but these will hardly be able to replace your gut instinct when spending money.
Do you use TWINT yourself when you are in Switzerland? And, if so, what for?
Yes, I am an active TWINT user. I use it most frequently to send money to other people. I also transfer larger sums to private individuals via TWINT and hardly ever use mobile banking now for such transactions. I also find it very convenient for making payments in the area of e-commerce.
About Simon Zwahlen
Simon Zwahlen has been working at Swisscom for five years. He initially held the position of Head of Innovation at Swisscom Banking, before then helping to shape Switzerland’s mobile payment solution as the Head of Paymit. He now represents Swisscom as the VP of Business Development in Silicon Valley.