Now is a transformative time for commerce. The payments industry is reinventing itself, and changing the way consumers and merchants see payments. So, how are the established industry titans maintaining relevance and changing with the times? One word--partnerships.

Since the invention of the magnetic stripe card nearly fifty years ago, the payments industry has served the financial needs of merchants and consumers. Today, U.S. consumers carry 1.2 billion debit and credit cards--and nearly 60% of Americans have smartphones, and that number is on the rise. The public is eager to adopt new electronic payment methods, realizing both the security and convenience benefits of the next generation of electronic payments.

Start-ups are innovating new products daily and investors are rushing to place their bets on the newest, smartest solutions. The attention payments is receiving makes perfect sense; it’s a $5 trillion and growing industry that embraces disruptive technology and offers amazing new growth opportunities. Seasoned payments companies are embracing change, forming partnerships with technology companies--and becoming technology companies themselves. For a start-up, a truly innovative product or service, ease-of use, scalability and security are all key to catching the attention of the next industry leader seeking a partner.

Industry titans are recognizing the vast opportunities for growth and innovation in the payments sector, and they are acting accordingly. For example, the list of payments processors that Google is partnering with is a who's who of ETA member companies, including Braintree, CyberSource, First Data, Stripe and Vantiv, enabling brick and mortar and e-commerce retailers to activate Android Pay for their customers. Google has also partnered with ETA members Visa, MasterCard, Discover and American Express to make it easy for consumers to load their existing cards in Android Pay and pay by phone. And then ETA members AT&T, Verizon and T-Mobile are partnering with Google to make sure your new Android phone works with Android Pay as soon as you activate it.

These partnerships help the tech sector consistently outperform the market. A key growth indicator is the rate of mergers and acquisitions activity, which grew 2.8% in volume this year.[1] The value of technology M&A deals jumped 37% from $138 billion in 2014 to $190 billion by June 2015. The top M&A deals featured payments and fintech collaborations, with Optimal Payments acquiring Skrill Group for $1.1 billion. One of the biggest deals of the year has been NXP's acquisition of Freescale Semi, which manufactures chips for Internet of Things connectivity--an area with enormous potential for payments.

There is endless room for innovation, and consumers are increasingly open to adopting new methods of payment that make their shopping experience easier and more personal. For established players, the start-ups are key to staying current – and for start-ups, these thriving companies are the gateway to consumer relevance. Partnerships are paving the future of payments.

Published on: Jul 28, 2015