It’s fair to say that 2015 was the year that for the consumer, mobile phone payments went mainstream, mostly driven by launches of Apple Pay in the US and UK, followed by Android Pay and Samsung Pay. My earlier blog on the top 5 payments trends in 2015 listed this as the third key trend.
2015 saw significant investment by companies producing mobile payment apps, particularly those who leverage the existing payments systems, such as Pingit and Zapp. It is unclear whether these, ACH-backed offerings will prove to be competitive against the card-based payments which already have a dominant position in physical and internet retailers.
2015 also saw Apple, Samsung and Google launch their mobile payments platforms, albeit with different user journeys and standards that could affect adoption by retailers. For example, Google’s offering also supports online purchases but not yet in-app whereas Apple is exactly the opposite. In addition, Google requires PINs for cards from some issuers and, from user experience, collaboration with card issuers will be critical for Samsung Pay which also offers a simulation of the old, magnetic stripe in addition to working with contactless transactions also supported by the other two.
However one key lesson can be learnt from the success of Apple Pay – working with the industry is important. Although the mobile payment scheme was seen as innovative, relying on biometrics and contactless technology, the real success was in how the scheme would work with the existing contactless card payments infrastructure. The only really “new” feature was the commercial model which allowed Apple to store “tokenised” card numbers on their mobile ‘phones. It could be argued that knowing which battles with the cards industry to win and which not to fight was the successful strategy.
The mobile payment schemes remain quite different. It remains to be seen whether standardisation can develop or if merchants and issuers choose one mobile payment scheme over another. Consumers could find themselves limited to the merchants using the platform they happen to have or having to use multiple apps to ensure they can transact at all their favourite shops.