May 19, 2020

Payment via digital wallets to reach $189B by 2018 thanks to Apple Pay

Near field communication
Jabong world
5 min
Payment via digital wallets to reach $189B by 2018 thanks to Apple Pay

Apple unveiled plenty yesterday, but their support of near-field communication (NFC) through Apple Pay is set to be the tipping point in widespread adoption of the mobile wallet. This is big news from a retail revenue standpoint because mobile payment programs mean more spending – twice as much according to a recent study. Here's an example: Starbucks sees 11 percent of its sales through its successful mobile wallet loyalty app, and the man behind it was recruited by Apple to create Apple Pay. Until this point, it's merely been the lack of program availability holding back a major shift in how we pay at the checkout line.

The rise of digital wallets

As the use of cash and checks declines, credit and debit card use increases. This trend has helped merchants by reducing barriers to sales and helped consumers by increasing convenience and security. Phase one of this digital cash transition, mobile credit card readers, has been happening for years, with mobile card reader technology making it easier and more affordable for merchants to accept credit and debit cards. Phase two is just beginning with digital wallets built into consumer smart phones and readers that can accept payments becoming more common at merchants.

Purchase barriers are disappearing. Anyone from a taxi driver to a food truck merchant can now accept your credit card. The US Treasury estimates that card-based mobile commerce will grow to $222 billion by 2018. Payments via digital wallets in consumer phones are just getting started but expected to grow quickly, reaching $189 billion per year by 2018. Source: Business Insider, The Future of Payments.

The development of mobile commerce

Mobile card swipe devices that attach to a mobile phone or tablet allow merchants’ to easily accept customer credit card payments from customers. Merchant mobile apps and devices are becoming more common, with growing competition to provide mobile commerce services. Some examples follow.

  • On August 13, 2014, Amazon launched Local Register, a mobile credit card reader and app that streamlines credit card acceptance via a merchant’s mobile phone or tablet. A key benefit is low transaction costs. Local Register offers low rates (1.75%), high security and easy purchase tracking online. Mobile payment competitors include Square and PayPal.
  • Square is one of the first services to add an EMV and chip-compatible card reader dongle that allows mobile payment via more-secure chip-enabled cards. EMV stands for Europay, MasterCard and Visa, a global standard for inter-operation of integrated circuit cards (IC cards or "chip cards") and IC card capable point of sale (POS) terminals and automated teller machines (ATMs), for authenticating credit and debit card transactions. This standard in Europe and Canada is scheduled to be adopted on US cards by 2015.

Digital wallets to pave the way for future payments

The line between credit card and smart phone is rapidly blurring. The Smart Card Alliance points to “contactless payments” as the inevitable future, using either chip-embedded cards or smart phones with NFC technology. Their research says the trend favors smartphones, because few people leave home without their phone. Money may be transferred via bar codesQR codes, or near-field communication (NFC) signals.

  • Google Wallet allows consumers to pay merchants or individuals via their smartphone or online from their bank account or Google Wallet balance. The service aims to replace customers’ credit cards and loyalty cards. Users receive transaction alerts instantly.
  • Isis Wallet is a phone-based app specific to Verizon network phones. The app partners with American Express, Chase, Wells Fargo and other debit and credit cards. Similar to its competitor, Google Wallet, Isis also manages special offers and loyalty programs with participating merchants.
  • Starbucks stores now accept more than 4 million mobile wallet payments per week. Their mobile payment system ties into a customer’s credit card for payment. The company rolled its barcode-based scan system out to customers in 2009. The customer’s phone displays a bar code on its screen, which is scanned at the register. In one scan, funds are transferred from a customer’s designated account and loyalty program data is recorded in a new twist on old “punch card” loyalty programs. Starbucks reports that 11 percent of its sales are now through its mobile wallet app. As NFC catches on, Starbucks says it can quickly adapt to use that technology as well.
  • Dwolla is a payment system that offers low transaction rates (25 cents for purchases over $10) for merchants and convenient, secure payments for consumers. The service partners with Veridian credit union to transfer funds directly from customer accounts without the need for a credit card.

Dwolla allows payments to individuals or merchants via NFC smartphone, email, LinkedIn or Twitter.

  • Wearable technology, such as smart watches or Google Glass, offers another potential way to make and accept payments. Voice commands tend to be the best way to interface with mobile tech, and a study by US Bank showed that customers tend to be uncomfortable making transactions via voice commands. But as people in the study got used to wearing the devices, they became more comfortable. Research on the viability of mobile payments via wearable devices continues.
  • One way around the voice command conundrum is to use a QR code scanning system. Bendigo Bank in Australia is among those testing QR code mobile payments. The merchant generates a unique QR code at the point of sale. To pay, the customer then scans the QR code with the camera on their app-enabled phone.  
  • Mobile payment users, on average, spend approximately twice as much through all digital channels than those not using mobile payments. Source: Bain & Company
  • And finally Apple Pay has entered the market place to catapult its adoption and popularity to new heights. 

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Jun 8, 2021

Six issues at the top of tax and finance leaders’ agenda

Kate Birch
4 min
As businesses accelerate their transformation journeys, tax leaders are under increasing pressure to add strategic value. Deloitte reveals six tax trends

New Deloitte research reveals that tax leaders are under increasing pressure to add strategic value as companies accelerate business model transformation, from undergoing digital transformations to rethinking their supply chains or investing in green initiatives.

According to Phil Mills, Deloitte Global Tax & Legal Leader, to “truly deliver value to the business, the tax function needs to rethink its resourcing model and transform its technology infrastructure to create capacity and control costs”.

And the good news, according to Mills, is that tax and business leaders have more options at their disposal to achieve this.

Reflecting the insights of global tax and finance executives at global companies, Deloitte’s Tax Operations in Focus study reveals the six issues at the top of tax and finance leaders’ agenda.

Trend 1: Businesses seek more strategic counsel from tax

Companies are being pushed to develop new digital products and distribution channels and accelerate sustainable transformation and this is taking them into uncharted tax territory. Tax leaders say their teams must have the resources and skills to give deeper advisory support on digital business models (65%), supply chain restructuring (49%) and sustainability (48%) over the next two years. This means redrawing the boundaries of what tax professionals focus on, and accelerating adoption of advanced technologies and lower-cost resourcing models to meet compliance requirements and free up time.

According to Joanne Walker, Group Tax Director, BT Group PLC, "There’s still a heavy compliance load today, but the vision for the future would be that much of that falls away, and tax people become subject matter experts who help program the machine, ensure quality control, and redirect their time to advisory activity.”

Trend 2: Tipping point for resourcing models

Business partnering demands in the tax department are on the rise, but 93% of tax leaders say their department’s budget is remaining flat or falling. To ensure that the tax function can redefine itself as a strategic function at the pace that is required, leaders are choosing to move increasing amounts of compliance and reporting to a combination of shared service centers, finance departments, and outsourcing providers that have invested in best-in-class technology.

Trend 3: Digital tax administration is moving faster than expected

in addition to the rising focus of the corporate tax department partnering with their business counterparts, transformative changes to the way companies share tax information with revenue authorities is also creating an imperative to modernize operations at a faster pace. Nine in 10 (92%) respondents say that shifting revenue authority demands on digital tax administration will have a moderate or high impact on tax operations and resources over the next five years—and several heads of tax said the trend is moving faster than expected.

"It’s really stepped up in the last couple of years," says Anna Elphick, VP Tax, Unilever. "Tax authorities don't just want a faster turnaround for compliance but access into a company’s systems. It's not unreasonable to think that in a much shorter time than we expect, compliance will be about companies reviewing a return that's been drafted by the tax authorities."

Trend 4: Data simplification and lower-cost resourcing are top priorities

Tax leaders said that simplifying data management (53%) and moving to lower-cost resourcing models (51%) must be prioritized if tax is to become more proactive at delivering strategic insights to the business. Many tax teams are ensuring that they have a seat at the table as ERP systems are overhauled, which is paying dividends: 56% of those that have introduced NextGen ERP systems are now highly effective at supporting the business with scenario-modeling insights. Only 35% of those with moderate to low use of NextGen ERP systems said the same.

At Stryker, “we automated the source P&L process for transfer pricing which took a huge burden off of the divisions," says David Furgason, Vice President Tax. "Then we created a transfer price database to deposit and retrieve data so we have limited impact on the divisions. We are moving to a single ERP platform which will help us make take the next step with robotics.”

Trend 5: Skillsets are shifting

Embedding a new data infrastructure and redesigning processes are critical for the future tax vision. Tax leaders are aligned — data skills (45%) and technology process experience (43%) are ‘must have’ skills in a tax department of the future, but more traditional tax specialist knowledge also remains key (40%). The trick to success will be in tax leaders facilitating the way these professionals, with their different backgrounds, can work together collectively to unlock lasting value.

Take Infineon Technologies, which formed a VAT technology and governance group "that has the right knowledge about how to change the system to ensure it generates the right reports", according to Matthias Schubert, Global Head of Tax. "Involving them early was key as we took a greenfield approach, so we could think about what the optimal processes would look like and how more intelligent systems could make an impact 

Trend 6: 2020 brought productivity improvements

Improved productivity (50%) and accelerating shifts to remote working (48%) were cited as the biggest operational benefits to emerge from COVID-19-driven disruption. But, as 78% of leaders now plan to embed either hybrid or fully remote models in the tax function long term, 34% say maintaining productivity benefits is a top concern. And, as leaders think about building their talent pipeline and strengthening advisory skill sets, 47% say they must prioritize new approaches to talent recognition and career development over the next two years, while 36% say new processes for involving tax in business strategy decisions must be established.

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