Last week MEF launched its annual Global Mobile Money report, which studied 15,000 mobile users across 15 countries. The headline statistic is that mobile banking and mobile commerce continues to engage consumers – especially in mobile first markets. 69% of mobile media users globally carried out a banking activity via mobile whilst 66% have carried out a transaction.
In tandem this year has seen the launch of Samsung Pay and more recently Android Pay, with Apple announcing its expansion plans for Apple Pay earlier this month. Yet MEF’s own report shows that in-store (where NFC payments are primarily aimed) is still a relatively small part of the mobile money pie. 12 per cent of people have made a proximity payment in the last six months. Four per cent have done so via NFC contactless, while seven per cent paid using a merchants ‘plug and play’ or mPOS device. Another five per cent said they paid via a mobile loyalty card scheme such as the Starbucks mobile app.
No doubt this is all about to change?
Below we asked MEF members and the wider mobile industry what they thought of the recent NFC announcements, both comparatively and as a move toward frictionless payments in general. MEF’s Global Mobile Money Report can be downloaded here for free.
Andrew Bovingdon, VP Product Marketing , Bango
But to reference that Henry Ford quote, does Android Pay represent a game-changer for payment, like the automobile changed transportation by horse, or is it just a faster horse – an evolutionary payment step driven by someone not wanting to carry a wallet?
A more interesting announcement at Google I/O was the launch of Hands Free payment trials with McDonalds and Papa John’s. Rather than simply replacing the card swipe with a phone swipe, Hands Free allows the customer to order their fast food, confirm their name and walk out without ever touching their wallet or phone. Hands Free is a clear example of using mobile to completely remove payment steps rather than simply replacing.
Bango’s experience in powering payments for the leading app stores has repeatedly proven that innovating around authentication – to completely remove payment steps – is the best way to “change the game”, and to grow mobile payment volumes, conversion rates and customer satisfaction.
Mark Stevenson, CMO – Zapp
The payments industry has been stagnant for years. The last real innovation was the introduction of debit and credit cards – almost 30 years ago. Due to this the industry is ready for a shake up, and our research shows that consumers are ready for the change. In fact 21 million of British consumers say they will switch banks if their bank does not offer mobile payments – suggesting banks (as well as retailers) stand to gain a significant competitive advantage by offering and accepting mobile payments. The likes of Apple Pay, Android Pay joining the fray confirms it – 2015 will be the tipping point for mobile payments in the UK.
Mobile payments will revolutionise our world. And we’ve only just begun exploring the possibilities this will open up. Soon, accessing the things you love will be simple, seamless and painless; you won’t even notice it happening. Pay by Bank app, launching in Autumn this year, is the first stage of this journey.
Zapp will initially launch with it’s Pay by Bank app offering for online payments in 2015 and in-store payments will follow. We envisage Zapp POS payments being used anywhere that you can currently use a contactless card payment.
Marco Veremis, CEO – Upstream
Apple Pay is building momentum in Europe, and wide-spread take up could see Apple leading a transformation in mobile payments. Customers will be able to use the NFC technology to make in-store purchases on their mobiles, further broadening payment options for western users.
Whilst mobile payment for products and services is still in its infancy within developed countries, the landscape is very different in developing markets. Here, mobiles have long been playing a pivotal role within payments, however it has been the telecoms operators who have brought about change through direct operator billing.
In the likes of Latin America, Africa, and Asia, cash is still used in 80% of transactions and credit card penetration is often as low as 1%. Mobile phone airtime is therefore a popular form of currency, and easily sent from one mobile to another. These consumers are using their phones to pay for digital services, store their money securely, and send money over long distances.
The cost of our Western mobile payments systems puts Apple Pay and its competitors out of reach of developing market customers. While NFC-enabled devices are cheap enough in the West, consumers in growth potential markets are still using basic feature phones which do not support NFC technology.
Mobile payments is maturing in growth markets, and it is following a very different technological path to what is happening in the West. What is clear is that mobile devices are key to the evolution of the payments process. Once smartphones become as cheap and ubiquitous in growth markets as they are in the West today, then they can be used at point-of-sale terminals and make transactions easier, however this point will is still year away.
CEO & Founder
Dan Beasley, CEO & Founder – Puzzle London
The raft of recent announcements – Samsung Pay, Apple Pay (coming to the UK) and Android Pay indicate that in-store proximity payments are taking off. For brands these services bring something that is actually quite routine – paying for something – to something that is unique – the contextual possibilities of mobile.
This means the option of introducing marketing to the payment process. Apple Pay and Android Pay both work alongside wallet services, storing loyalty points for example and automatically giving consumers redemption options at the checkout. Both companies are clearly backing loyalty as an essential component to get people using mobiles payments.
And for retailers, there’s a major opportunity to capitalize on this growing channel.
One great example of this is Starbucks. The company is now processing in excess of 8m mobile transactions a week from 16m users of its payment App. Starbucks’ mobile app lets users top up a wallet then generate a barcode, which is scanned at the checkout by the barista. The scan debits a payment and also automatically registers loyalty points.
Although wholly proprietary and not NFC, it shows how the company understands the contextual elements of mobile payments. It’s still reckoned to be the world’s most used mobile wallet and that wouldn’t have happened without the loyalty scheme that goes with it.
Chief Marketing Officer
Rene Ho – Chief Marketing Officer – Monitise
At launch, Android Pay allows for unique purchase and reward experiences that Apple Pay doesn’t yet offer. Imagine being able to walk up to the checkout with your goods already accounted for in your app because you scanned the items with your Android device when you picked them off the shelf. Consumers will just need to unlock their phone, put it near the NFC terminal deployed at any one of the 20 million plus NFC-ready POS terminals around the world (Berg Insight) and the payment will be done.
Android Pay is using the payment networks token service to work with the likes of Visa, MasterCard and American Express, not against them. Loyalty programs applied to purchases can also serve up content tailored to the individual and complete payment. This opens up exciting opportunities for businesses looking to engage the increasingly brand-agnostic consumer.
In having an open platform and giving apps API access to payment credentials, banks, merchants and other brands with a mobile offer have the ability to improve our buying experience. And a far more convenient payment method will undoubtedly supercharge mobile payments adoption and ultimately transform the way we shop.
Roelant Prins, CCO – Adyen
Android Pay marks another big leap for the mobile payments ecosystem. Providing frictionless payment options is going to be very meaningful to consumers — whether using their phone, tablet, Android Wear gadget, or any future smart home device. By incorporating secure payments into the API layer and giving merchants, developers and device makers the option of one-click or zero-click payments directly in their offerings, Android Pay is a big step forward.
With Android Pay, Google has taken a fresh approach to payment applications. The biggest win for Android pay is that merchants can now have payments inside of their own apps. It means 3 things: Less friction for consumers, fully integrated consumer experience, and an omnichannel experience that enables merchants to connect the dots between in-store and online purchases.
Iain Devine, Commercial Director – Salmon
The launch of Android Pay emphasises the need for retailers to evolve with the changing customer journey. A ‘digital-first’ world means consumers demand things better and faster, expecting to shop at the pace, time and location of their choosing. Retailers must seamlessly integrate customer experiences across multiple channels to meet such demand. For example by capturing data from every customer touch-point, retailers can deliver a next-generation shopping experience. Targeted promotions, added extras for loyal customers or customer recognition at the payment stage will all give retailers the edge.
But whilst mobile payment offers customers an experience that is smooth and trendy, it needs to have more tangible benefits as consumers hop from platform to platform. And whilst the retail experience becomes quicker to make our busy lives easier, interaction is still paramount. Customers return to brands that deliver an exceptional level of service and ultimately the retailers that win will be the ones who offer a mix of modern convenience and traditional customer values.
SVP Products & Marketing
Gavin Ray, SVP of Products & Marketing – ip.access
While some retailers may resent Apple’s power, consumers love the brand so now is time to embrace them and share the rewards. Apple, and Google for that matter, is able to build strong customer relationships through payment solutions and data collection. To move forward, retailers should be looking to combine their online customer data with their in-store information, and bridge the gap for the consumer, so moving from the digital to physical shopping experience is almost seamless.
Another element to consider is the millennial customers, who have grown up in the dotcom age, with a smartphone in their hand and social media at their fingertips. Traditional retailers need to adapt and adopt rapidly developing technology in order for them to communicate with these customers in the right way. It is time to start opening conversations instead of simply messaging at potential consumers.
Ominpresence, or ominchannel, is becoming the Holy Grail for retailers in an era when consumers have more choice about how they shop than ever before. The honey of Apple’s evolution has the potential to attract more consumers than the vinegar that is rejecting new technology.
VP of Product Strategy
Spiros Theodossiou, VP of Product Strategy – Skrill
The payments industry has a lot to thank Apple for – not the least for making a lot of people familiar and comfortable with online payments and digital wallets.
While Apple Pay has seen slower than anticipated adoption in the US, much of this is due to the far smaller base of places where Apple Pay can be used (contactless terminals) there. The good news for Apple is that the UK has embraced contactless payment methods with 58m contactless cards issued and a 330.8% rise in contactless payments in 2014, according to the UK Cards Association.
As consumers do more on their mobile phones, they demand more connected and immediate experiences. This is what is driving the likes of Apple, Google and Samsung to tackle the payments space.
Such brands help build credibility among those consumers previously cautious of adopting mobile payments. This is good news for the digital payments industry as a whole and will only accelerate the migration away from cash to more convenient payment methods such as digital wallets from providers like Skrill.
This is just one of multiple disrupting technologies that will impact banking and payments. Whether its mobile devices allowing instant access, or NFC being integrated into phones and wearables, or Facebook offering payments through messenger, payments is set-up for a revolution in the coming years. There is no doubt the relationship consumer have with banks, card schemes, phone manufacturers and technology companies will continue to change.
Marie Dalton, Marketing Director EMEA – Connexity
It’s clear all the main players are placing their bets on the future of NFC and contactless mobile payments. It’s an exciting development and it may not be long until consumers are favouring mobile payment over the traditional methods.
Our research has shown that UK shoppers are warming to the idea of mobile NFC technology, although there are still some obvious concerns over security. These worries, however, may be unfounded – with Apple Pay in particular, fingerprint recognition is required to enable NFC, making this payment method one of the most secure. Moreover, credit card details will be protected by ‘tokenisation’ – where the merchant receives a randomised account number instead of your real details so that in the event of a credit card data breach your information is secure.
One of the obstacles which still remain in mobile payments catching on at present is simply that NFC technology and fingerprint readers are only present in the newest devices, such as the iPhone 6 and the Galaxy S6. This is where both Samsung Pay and Android Pay have a head-start.
While Apple Pay requires fingerprint recognition, Android Pay can be activated with a pin number, therefore opening the service’s compatibility to more Android devices. However, Samsung Pay has an even greater advantage – with MST technology, Samsung Pay won’t be restricted to tills with NFC receptors but is also compatible with any till that has a magnetic strip reader.
As we develop to become a mobile-led society, brands cannot afford to wait to research the options and the interest of their customer base. Now is the time to act. Now is the time to invest in mobile payments.
European Technical Manager
Winston Bond, European Technical Manager – Arxan Technologies
The launch of Apple Pay and, more recently, Android Pay, has led to a renewed interest in mobile payment services via Near Field Communication (NFC) on mobile and wearable devices. The launch of Android Pay is a defining moment in the future of mobile payments. Yet, payment systems can only work when everyone accepts the same form of payment. There isn’t room for a different payment system for every phone maker – the market would simply become too fragmented.
The strategy Android has chosen of building a common payment platform based on software and providing an open API for developers is the best option for consumers, merchants and banks. The challenge that needs to be confronted head-on is in ensuring the payment tokens, the cryptographic keys within the software, are properly secured.
Android’s software-based approach via HCE replaces private card data with a HCE token that protects privacy and prevents fraud in mobile payment transactions. However, the cryptographic payment tokens within the software must be properly secured with a software secure element that provides anti-tampering and white-box cryptography technology. Delivering such a level of protection for the mobile payments sector is critically important as these new capabilities see broad consumer adoption.
Hayden Reed, Senior Vice President – Digital River
What Apple Pay and other emerging wallet options offer consumers is more choice and convenience in the payment experience, as well as added security and confidence in the payments ecosystem. With Apple Pay, for instance, what may have otherwise been a magnetic stripe and signature transaction is now managed as a tokenised, EMV and biometric transaction.
These more secure transactions not only have important advantages for consumers but also for merchants, including reduced costs and greater sales. By shifting the definition of digital wallet transactions and aligning it with EMV, whether the transaction is contactless or in-app, the digital wallet providers in concert with issuers and card schemes have enabled options that payment providers and merchants will look to further leverage.