Mobile

Ask the Experts: Mobile Payment Technologies

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Editor’s note: China’s Alibaba Group is developing facial recognition software to replace passwords in its online payment service, Alipay, where more than half of the transactions processed in 2014 came from mobile devices. Despite this advancement, there is a wide range of acceptance of mobile payment technologies in both B2C and B2B spaces worldwide. We asked three experts for their opinions on adoption of mPayment technologies.  

Q: When do you think mPayments technologies will move from their current niche status to mainstream adoption? What is the biggest factor now holding back greater adoption? 

Shoehorned technologies

-        Markus Milsted, CEO and founder, Omlis 

Mobile payments will achieve mainstream status when consumers trust that their information, both transactional and personal, is completely secure via the mobile channel. Mobile payments also will become more mainstream when there are fewer competing technologies for both consumers and retailers to engage with mPayment services. Publicized data breaches in the retail and financial sectors have done nothing to increase consumer confidence in digital technologies so trying to encourage their trust in newer, more complex technologies with a plethora of mobile device options and platforms certainly presents key challenges. 

The provision and communication of absolute security will be a key catalyst for increased consumer adoption of mobile payments. Many organizations flirting with mPayments are trying to shoehorn existing security technologies for mobile payments, even though some of these technologies already have been exposed as weak and vulnerable. Mobile payments security demands technologies built specifically from the ground up to secure transactions via the mobile channel. These organizations have to get security right for the device and also point of sale. 

A lot of focus has been placed on creating a fast and easy user experience for mPayments; but if trust is exempt from this equation, then the whole scenario is a non-starter. The mobile device affords convenience for consumers and has become a necessity as we all search for immediate ways to engage in activities we deem necessary anytime, anywhere. For the mobile device to become a means for transaction and not only a source of information, consumer trust in security must significantly increase. 

Bottom line

-       Oren Levy, CEO, Zooz 

In my opinion, mobile payments are already mainstream – the fact that the two biggest mobile handset manufacturers in the world (Apple and Samsung) are offering mobile payment solutions attests to this fact. However, there are a number of factors impacting consumer adoption of mPayment technology. 

First and foremost is the consumer experience; as the experience becomes more seamless, consumer adoption will rise. Apple is known as a company that optimizes technology through enhancing the consumer experience, and they are likely to have a significant impact in catalyzing mobile payments adoption. 

Equally as influential, adoption will be affected by the number of businesses that are equipped and willing to accept mobile payments. 

Finally, the ability of mobile solutions to spread and gain traction in Europe and worldwide will affect adoption. Contactless mobile payment solutions have already been in use in Japan for many years and are gaining popularity globally. The bottom line is that mPayments are here to stay and will continue to develop. 

ApplePay juggernaut

-       Andrew Dailey, managing director, MGI Research 

In a word, friction. Friction has largely been the gating factor to mass market adoption of mPayments. Two of the leaders of the Digital Revolution (or Third Industrial Revolution, take your pick) are Apple and Amazon, and both of them are really good at removing friction. As the installed base of Apple customers upgrades to the iPhone 6, the ApplePay juggernaut will transform how we think about payments – and reduce what we carry in our pockets. Look for Google/Android to be fast-followers; and combined with Apple, that’s 97 percent of the smartphone market, which will reach 80 percent of all adults on the planet by 2020 according to the Economist.  

The quantitative data indicate mobile payments are already moving into mainstream adoption. A recent survey of iPhone 6 users indicated that 40 percent have used ApplePay, and nearly 70 percent of banks plan on implementing ApplePay. About 25 percent of total online spending comes from mobile devices. More broadly, digital payments are being embraced by business. It costs $5-$25 to issue a paper check, compared to $1-$2 for issuing an electronic payment. 2015 is probably the last year 22 billion paper checks will be issued. The future is digital and mobile. Three years from now, this question will sound quaint. 

Andrew Dailey is a managing director of MGI Research. He leads the enterprise applications and billing solutions coverage for MGI. He has over 20 years of diversified technology and financial services experience as a software executive, industry analyst (Gartner) and advisor to Fortune 500 companies. Follow him on Twitter.  

Oren Levy is CEO at Zooz. He is an experienced professional with over 15 years’ experience in payments, commerce and global business. Prior to Zooz, he was an executive director at Brookline (USA) for 11 years, managing its worldwide sales efforts and strategic partnerships initiatives. Before Brookline, he held marketing, business development and technical positions at BATM, Fundtech and L.G.E.S. 

Markus Milsted is the founder and CEO of Omlis, pioneers of high-integrity mobile payment encryption processes that deliver a high-performance, totally secure and massively scalable mobile payment encryption system. Contact him at markus.milsted@omlis.com and follow him on Linkedin.

ReThink. SandHill.com is proud to be a media sponsor of The Billing Innovators Summit West 2015 on April 29 at the Julia Morgan Ballroom in San Francisco, Calif. Mention the promo code “SandhillLeader” in your registration for a 10 percent discount. This event features business case studies, CEO interviews, MGI 360 Ratings, and panel sessions with MGI Research analysts and recognized experts in billing, quote to cash, revenue recognition and pricing.  

Comments

By thomas cannon

Thank you for including me on your list. Interesting views. I believe hurdles regarding a so called inevitability of mobile adoption for payments remain. Over the past 20+ years, all payment brands, private label, co-branded, major issuer brands push for ‘use ours’, the consumer has ever more choices. Merchants have tired limiting choices and it costs them sales. Consumers want to pay with their preferred personal method for many reasons! Credit, debit, prepaid, new credit on the spot, loyalty preference (a whole other currency in kind), and CASH, compete for the sale. Enormous evidence that choice of which brand to use is the consumer dilemma. Purchase is their choice, and a merchant ability to accept any form of payment is tricky. A hierarchy is mandated when one sets up an ewallet, (not very successful for going on 20 years), authentication is crucial for merchant as brand will push back declined transactions, so branding becomes very important, VERY. In love with Apple is a common thread, and Apple is failing not providing redundant bullet-proof loading, already causing angst. Consumers are fussy and tricky – the demographics are dynamic. Choice must be simple. It is not right now as one is restricted in time and motion ergonomics at the payout counter. Clearing small micro transactions is a chip shot for mobile. Consumers are ok with that. But…..only a closed loop issuer makes money, as a payment brand makes money on larger tickets. Banks know this. < $ 15 is generally an unprofitable transaction, whether interchange, restricted debit fee or other. 85 % of transactions remain cash. Cards and brands make money on larger ticket. Just the way it is. One cannot make money at $ .25 per tran. It costs at least $ .18 before SG&A. So dreams of every coffee we shall clear, or burger meal may be a mobile dream but it is not a business…not now. Exception item handling or lack thereof kills 95 % of payment people trying to get in the business. Has not changed in 38 years I have been in it.

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