Moving Money: The Future of Consumer Payments

5 The Future of Consumer Payments: An Insider's Perspective

The payments industry that I know is both global and dynamic. It is without a doubt a highly competitive industry, one that is rapidly innovating and evolving. It is an industry that exists in various stages, largely depending on geography. In some markets customer needs are simple. Products are basic and providers are few. In other countries customer demands are greater. Products are high tech and the competitive landscape is quite diverse. But regardless of its evolutionary stage in any given market, the purpose of the industry remains the same: to facilitate the conduct of commerce and improve the efficiency of day-to-day transactions among consumers and businesses. As we all know, the global environment is evolving at an accelerated pace, not just for payments but for all businesses. So even though I know my industry well, I also know that to attempt to predict the future of payments is an assignment fraught with peril. But while I can’t predict the future with certainty, I can offer my perspective on trends that are currently under way across the industry, trends that will likely shape the evolution of payments over the short, medium, and long term. Before I look ahead, however, I want to first take a moment to look back—specifically, to look back to how American Express became a payment company. While I’m always on the lookout for opportunities to showcase our employees and our company, let me assure you this his5 The Future of Consumer Payments: An Insider’s Perspective kenneth chenault 102 05-0277-1 CH 05:05-0277-1 CH 05 5/23/12 5:07 PM Page 102 tory lesson is not intended to be self-serving. It is relevant to today’s topic because I believe American Express’s own history offers insight into how the overall industry has evolved and how, even today, it continues to reinvent itself to meet, or anticipate, the needs of customers. Our founders include two names that are familiar throughout the business world: Henry Wells and William Fargo. In 1850 we opened our doors as an express company, a freight company. We moved packages and currency for people across states and across territories. Think Federal Express with stagecoaches and that was us. As the United States expanded during the latter half of the nineteenth century, so did the needs of our customers. American goods and materials were not just being shipped between states, but to the rest of the world as well. In response, we expanded our own corporate geography, setting up freight offices in a number of international capitals. As the country prospered, more and more Americans wanted to see the world, so we formed a travel agency to help them go overseas. International journeys, whether for cargo or people, also had to be paid for. At this point in history there was no means of payment that could easily cross borders, so we created our own, inventing both the American Express travelers cheque and the money order. By the 1950s customers demanded greater financial flexibility, both at home and while traveling. To meet this need we launched our first charge card in 1958. And this year, we’re proud to celebrate its fiftieth anniversary. As a former history major, I always look for ways to learn from the past. And while I’ve gained many insights by studying my company’s 158-year history, two insights are particularly relevant for today’s conversation. The first is the importance of driving change, not only in your own company but also through your industry. American Express has shown the flexibility and resolve to reinvent itself, adapting to customer needs and to a changing marketplace. Given the dramatic pace of change across the industry today, this capability is clearly an important asset for any payment company to have. An Insider’s Perspective 103 05-0277-1 CH 05:05-0277-1 CH 05 5/23/12 5:07 PM Page 103 My second takeaway is that, at its core, the payments business is dependent on a very basic element—trust. Trust that your payment will be correctly handled. Trust that your interests and assets will be protected . Trust that someone will be there when you need help. Whether it is shipping gold from New York to San Francisco, having a merchant accept a travelers cheque half a world away, or using a credit card...