Get up to speed with the newest developments in mobile payments.
By Kristen Gramigna (Chief Marketing Officer, BluePay)
While mobile payments have existed in at least some form for a few years, this past year in particular has been full of change. Here’s a look at how some of the recent evolutions and advancements in mobile payment technology will continue to shape how consumers and businesses use mobile payments.
1. Increased Convenience
Apple announced the launch of their mobile wallet Apple Pay on Sept. 9, 2014. The mobile wallet allows consumers to digitally store their credit card and financial information they’d like associated with their Apple account, and pay using their Apple 6 or Apple Watch.
The technology includes partnerships with more than 200 retailers, including various merchants, restaurants and financial institutions. Almost immediately, tech, financial and retail media headlines had a renewed focus on mobile payments, even though Google Wallet and PayPal One Touch, which have been available to consumers since 2011, didn’t take off as originally predicted.
But, as Professor Fred Davis explained in a Marketplace article, consumers want financial technology of any kind to be convenient and easy to use, before taking the time to adopt it.
Thanks to the breadth of Apple Pay partnerships in tandem with the fact that they sold more than 74 million iPhones in their first quarter of 2015, mobile payment technology may finally offer customers a reason to confidently believe they can ditch a physical wallet and replace it with a mobile device.
2. Less Confusion and Competition
Though mobile payments and wallets of days past were founded on the idea of increased convenience, the industry was highly fragmented. Not all retailers had the infrastructure to support the technology, and as a result, there wasn’t a streamlined customer experience, or a compelling reason to believe in its superiority compared to simply swiping a card at the point of sale.
Shortly after the Apple Pay news was unveiled, the mobile payment industry as a whole took notice — and the consolidations began. In early March 2015, Verizon, AT&T and T-Mobile agreed to sell their payments platform Softcard to Google.
A few weeks later, Paypal announced they would buy mobile payment provider Paydiant (to the tune of $280 million), explaining that they were attracted to the provider because of their “clarity of focus on mobile and how large merchants need to utilize mobile to connect with their customers.”
As the value proposition and functionality of mobile payments and wallets evolves, consumers and businesses will likely begin to view mobile payments less as one means to pay, and more as their primary mode of payment. Echoing that sentiment, eMarketer predicts that by 2018, nearly 30 percent of smartphone users in the U.S. will make a mobile payment at least once every six months.
3. Increased Interest by Businesses
Mobile payments are nearly tailor-made for the small-business world. They leverage technology that business owners likely already own and rely on (like smartphones and mobile devices) for business, allowing for low infrastructure costs — but increased customer convenience.
With mobile payments, small businesses can transact anywhere, whether from a place of business, a trade show or a client job site. Increasingly, businesses are recognizing these benefits — largely due to the advancements in the space.
According to eMarketer, 60 percent of small business owners responding to a 2014 survey conducted by Rocket Lawyer said they would consider adopting mobile payments into their business model in 2015.
4. Solutions to Security Concerns
Consumers are increasingly aware of vulnerabilities that exist in current methods of financial transaction processing, due in part to a wave of large-scale data breaches that struck retailers like Target, Home Depot and even the United States Postal Service. Customers and businesses are ready to hear about new solutions that improve payment security.
Mobile payment security advancements in the past year include Apple Pay’s use of tokenization. To better protect sensitive data, it assigns random numbers to identify, process and verify Apple Pay transactions.
In late 2015, consumers will also enjoy increased security with the mandated industry-wide reissue of magnetic-stripe credit and debit cards to chip-based Europay, MasterCard and Visa (EMV) smartcards. With such evolutions, consumers may begin to feel more confident about mobile payments and the security of their sensitive data.
Are you confident in using mobile payment systems?
Photo credit: Bacho via Shutterstock.