Spotlight On Mobile Payments
While the mobile payments marketplace is still viewed by some with skepticism, it is already greatly impacting the consumer, retailer and marketer value chain. We’ve witnessed technology’s impact on consumer behavior before and know that these disruptive movements tend to growslowly over time before suddenly taking over as an indispensible element of daily life. In fact, if you blink you may even miss that pivotal moment when a fringe technology becomes the status quo.
Will 2016 be the tipping point?
This year we’ve already seen tremendous acceleration in this area as tech giants, financial institutions and retailers put the infrastructures in place to give us a solid foundation for future success.
According to BI Intelligence, mobile payments are projected to reach $37 billion by the end of 2015 and will account for 50% of all digital commerce in the U.S. by 2017. Yet, this holiday season only 22.6 million people, a scant 12.7% of smartphone users3, are expected to use their devices to make a purchase –illustrating that potential is still unrealized by the masses.
In this updated Spotlight, MEC reviews the evolution of mobile payments over the past 12 months to keep you ahead of the curve, reviewing the current ecosystem, new players and platforms, as well as the fast-changing consumer behaviors accelerating adoption. We also examine the emerging opportunities and imperatives for brands to drive increased value for consumers across both brick and mortar and ecommerce channels.
The difference between payments and wallets
Mobile Payments refer to any monetary transaction made via a mobile device, whether through a web browser, an app or near field communication (NFC) enabled proximity payments.
The term, however, is used most often to refer to proximity payments made via NFC. Unlike online mobile payments made via an app or a website, proximity payments require an NFC chip to be integrated with a physical object –e.g. a keychain fob, a credit card or, more often than not, a mobile device. As a result, NFC payments have generally been the domain of financial institutions and device manufacturers.
Many card issuers and payment processors have integrated NFC into their cards, dongles, stickers and, in some limited cases, mobile devices in an effort to own proximity payments. However, as consumers increasingly rely on smartphones as a single repository for personal information and life management, it’s expected that the mobile payment solutions native to the most popular smartphones will have the most widespread adoption. That means solutions like Android Pay, Apple Pay and Samsung Pay.
Mobile Wallets refer to native apps that can be used to manage and execute a range of information and digital transaction types. Some allow users to execute digital payments, while most give the opportunity to store payment information for online, in-app and NFC transactions. Many also enable users to manage rewards accounts, coupons, tickets and passes of all kinds. Wallets issued by a bank or a financial institution are generally limited to executing online payments, while wallets issued by a hardware original equipment manufacturer (OEM), such as Apple Wallet, can communicate with the device’s NFC payment function to augment a transaction in the physical world at point of sale (e.g. apply coupons or accept rewards points).
While wallets can be used to conduct monetary transactions, their true value is as a CRM tool. In many ways, they present a more interesting proposition than online payments since they gather and generate a high volume of user data and enable more efficient usage of offers and loyalty programs. As a result everyone, from device OEMs like Apple, Samsung, and Google to retail banks like Chase and Citi to startups of all kinds are competing to own the mobile wallet market.
To continue reading please download, Spotlight On Mobile Payments