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?
- 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.
- 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.
- 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 email@example.com and follow him on Linkedin.
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