Mobile payments may well be set for a period of explosive growth, according to the recent Guardian article “Mobile payments: the brave new cashless future”, but it won’t just be down to Apple Pay, despite its apparent success since launching in the US in October of last year.
Yes, Apple Pay might be convenient and secure – two of the three consumer-centric attributes which MasterCard’s Jorn Lambert identified in the same article as key to the success of m-payments – given its reliance on a tokenized set of card credentials in an embedded Secure Element, a Touch ID payment authorisation process and a slick user interface. However, it falls short when it comes to the third attribute identified by Lambert, namely ubiquity. Never mind that Apple Pay is only accepted at the 3% of US retail terminals which have been upgraded to support contactless payments, it is also only available today on the iPhone 6 (and soon on the iPhone 5 for anyone who pairs it with an Apple Watch) so it definitely won’t be everyone’s favourite way to pay, at least in the short term.
Separately, Kevin Dallas of Worldpay took the view that merchants need to ensure that they partner with the “right” payment app since research suggests that consumers will only load one or two payment apps on their phones to avoid confusion. Since in-store retail payments still account for over 90% of all payment transactions by dollar volume, we would argue that the “right” mobile payment app for merchants to support is one which is optimised for use at a point of sale (POS) terminal. The following might help those merchants who are still sitting on the payments app fence come to the right decision:
- Apple Pay was launched to support both in-app and tokenized in-store NFC (contactless) payments
- Samsung Pay has just been launched to support both NFC and magnetic secure transmission technology (MST)
- Google have recently announced support for Android Pay which uses NFC and tokenization
- MasterCard announced (Sept 2014) that all legacy POS devices in Europe must support contactless payments by 1 January 2020, with all new POS devices to be compliant from the start of 2016
Merchants who today accept card payments will – in five years or less – be accepting contactless card and mobile payments. Those merchants who today do not accept cards but who want to accept mobile payments would do well to consider a future where smartphone penetration is expected to reach 6bn subscriptions by 2020, where the dominant handset models will be mobile payment and NFC-compliant and where their competitors are servicing customers with these handsets at contactless POS terminals for both low and high value transactions.
That’s right: the future of mobile payments isn’t cashless, it’s contactless.