Online payments processing is changing. Out with the old, in with the new. Square gets a 3 billion valuation. It's all about time.

I was reading in the FT on Saturday (which is completely recommended as a great weekend paper along with The Sunday Telegraph) about Brad Miller, a techy in California.

He goes into a coffee shop, but the time he gets to the till to pay for his coffee, his picture has appeared on the ipad, which the coffee shop uses as a terminal. The assistant identifies him from the photo, taps the screen and he's paid. It's one new mpayment system called 'Square'.

As he leaves, a receipt drops into his iphone.

This is becoming a world without cash and a world without cards.  Called mpayments (or mccommerce) as in 'mobile payments' it extends the way we buy tickets, coffee and anything from a smartphone. Indeed, one questions the need for ATM's in the future?

Payment processing is something I do know a little about having been involved as a Director with 'Realex payments' from the start, who have been the dominant Irish payments processor for some years. However, what's going on, is an upending of the traditional payments business made possible by tablets and smartphones.

Square, one such new company of about 150 start-ups in the space, headed up by Jack Dorsey of Twitter, reached a 3 billion usd valuation this week. A fairly slick App, it's linked to a users credit card or bank account. Running constantly in the background on a smartphone, it allows facial recognition in shops and that single tap to complete the transaction.

But changing habits will take time and technology can still get better. What it is doing however, is playing traditional payment processors such as Visa, Amex, off the field and indeed, traditional processing companies. 

Paypal are seemingly trying to re-invent themselves and fit into the mobile payment revolution but I think their game is up. Definitely, their margin is up (!) as is the traditional outrageously high margins charged by Mastercard, Visa and all. They're definitely facing a low income future - whatever happens - and about time too.

They'll certainly also have new competitors in the form of these start-ups but also mobile operators, well placed to adopt these new technologies and embed them in handsets. Which is absolutely key. Own the distribution, you own the customer.

Google and Microsoft are moving in and Apple have started, albeit gently, with their 'Passbook'. The space is heating up.

Gathering payment data has also other advantages in linking it to say, coupon features, shopping suggestions or indeed, advertising - and yes, given the privacy issues. 

One thing is certain too, we're looking at a boom in mobile payments at the expense of companies who've had it too long their own way. Digital is changing this business and replacing fat companies with new, lean, smart, start-ups.

And you'll see the new folks win.
And you'll see the big boys fall.
As we've seen before.

And no harm too.