It’s been quite a while since we have talked about mobile payments. The last blog I could find on the subject was from 2012. And, thinking back on what has happened in the 3+ years since, I am reminded of the tagline Apple has been using in promoting its iPhone 6s. “The only thing that’s changed is everything.” And the old adage; “The more things change, the more they stay the same.” is also proving to be true.
What’s changed? There are many new entrants into the mobile payments arena. Apple Pay launched in late 2014 and was joined in 2015 by Android Pay and Samsung Pay. These are the solutions you have probably heard about the most. All utilize NFC (Near-Field Communications) to communicate with contactless enabled POS (Points of Sale) systems at physical retail locations. Samsung Pay has an additional benefit of using MST (Magnetic Secure Transmission) to simulate card swipes, expanding its reach to 90%+ points of sale.
On the cloud-based transaction side, which are payments that are typically initiated using a QR code and completed in the cloud, away from the physical POS, MCX, or the Merchant Customer Exchange, a coalition of 70+ large merchants, is piloting their mobile commerce solution, CurrentC, which promises to incorporate loyalty and offers in a more customer-friendly way than NFC –based solutions. And while you may or may not have heard of CurrentC, it is important because the technology platform underpinning the solution is also underpinning announced upcoming solutions WalMart Pay and Chase Pay.
That’s great for shopping in physical locations, but what about internet commerce? Some of the solutions mentioned above can be incorporated into app shopping, namely Apple Pay, Android Pay and Samsung Pay. Walmart Pay will be able to be used on the WalMart app or website. For true browser-based internet shopping though, these solutions have not migrated properly. That area is being tackled by groups looking to hold your payment information for quick use on websites, namely, Amazon One Click, PayPal, MasterCard MasterPass , and Visa Checkout. I suspect that both camps will try to move to the other’s territory in the coming years, but that remains to be seen.
What’s staying the same The space is still confusing with no clear winners emerging yet. The ‘hockey stick’ of mobile payment adoption has not come to fruition. No solution has achieved ubiquity of acceptance, which is a hurdle for repeat usage. Many solutions have not properly incorporated additional benefits such as loyalty and offers and therefore don’t provide an improvement over the current card swipe, which is pretty fast and effective.
The adoption of EMV terminals may accelerate mobile payments adoption for two reasons, 1) dipping a card and waiting is much slower than swiping and therefore mobile may provide an attractive alternative. 2) Most EMV terminals have NFC capability which would provide for greater merchant adoption, if they would only decide to turn that capability on.
There is one wildly successful use case in the mobile payments arena. Starbucks. Their mobile app comes with a reloadable prepaid card and now order-and-pay-ahead functionality that is integrated with their rewards program. Simple, clear value proposition with an enthusiastic customer base performing a habitual act. Mobile purchases now account for 21% of Starbucks purchases. Adoption is possible and, in fact, many of us feel mobile payment is inevitable, but outside of Starbucks, we have yet to see it in practice.