Happily, following its breakout year in 2015, the mobile payments industry has seen continued innovation and growth in 2016.

So, as we approach the end of the year, what are the key trends and technologies that will shape the industry into 2017?

IoT and ‘invisible payments’

Providing the consumer with a truly frictionless experience is the holy grail for the payments industry. This has already been achieved in-app with platforms such as Uber, but has yet to be translated in-store.

In the IoT era, however, we are moving ever closer to delivering a seamless in-store experience. Beacons, geolocation, computer vision and biometric technologies are being combined to deliver a frictionless experience.

Indeed, the industry will closely be monitoring the success of Amazon Go, which is currently in beta but is expected to launch publicly in early 2017. The concept deploys various technologies (the exact details are yet to be released) that enables a consumer to walk into the store, pick up an item and walk out, with the order charged to their Amazon account upon leaving.

As well as Amazon Go, we also predict myriad other pilots, demos and announcements throughout 2017 that aim to move all stages of the in-store payments process – from initialization and authentication, right through to final confirmation – firmly into the background.

OEM Pay: Evolution, not revolution

Increased consumer awareness, ever-expanding acceptance and more mature offerings means that the various OEM Pay platforms will continue to go from nascent to mainstream in 2017.

The conversation surrounding mobile payments, however, will change. With ‘tap and go’ cultures becoming increasingly engrained, consumers now expect to be able to make contactless payments. The added convenience of paying with your mobile device is no longer the main driver of adoption.

Instead, the focus is shifting from changing the payments process into a ‘buying experience.’ The key to this is the specific, intelligent deployment of value-added services such as rewards, loyalty and couponing. For example, Apple has just partnered with Blackhawk Network to integrate eGifts, loyalty and rewards programs into Apple Pay. And Google has gotten into the festive spirit with Android Pay Christmas Crackers, which delivers rewards to users.

Chinese tech giants enter the fray

China is the world’s biggest mobile payments market, with transaction volume hitting $235 billion in 2015.

The dense regulatory framework, which precludes international companies, has seen AliPay and WeChat platforms establish a dominant market position.

The nature of the Chinese mobile payments market, however, has meant that it operated in essential isolation. Times are changing. For example, AliPay has recently announced partnerships to bring its service to Europe and Australia. The rapid global expansion of both the AliPay and WeChat platforms is likely to have huge implications across the entire payments industry. Although the platforms are currently aimed only at Chinese tourists abroad, it is apparent that the long-term strategy is to develop a global offering.

Alternative payment channels

More and more retailers are developing their own payment applications to control the payments process and deliver a unique, tailored experience, and we expect this will continue throughout 2017.

In addition, initiatives such as QR code mobile payments are enabling retailers to keep the payment process ‘in-house’ and reduce network fees. QR codes may not necessarily be the future, but the trend of retailers identifying and developing alternative payment channels is here to stay.

Source:http://www.mobilepaymentstoday.com/articles/2017-introducing-mobile-payments-20/


Money20/20 is over for another year. And as sore feet (and heads) recover and the dust starts to settle, attention is turning to the big trends and key themes.

The show has always been focused on the future and this year’s installment was no different.

In particular, there was much to make retailers sit up and take notice, for it is readily apparent that payments are in the midst of unprecedented transformation.

So, what forces are driving the change and what does the future of retail look like?

In-store on the way out?

Brick-and-mortar stores are under threat from all angles.

From a payments perspective, the in-store checkout experience is increasingly incompatible with modern lifestyles and expectations.

For example, 86 percent of consumers avoid stores with long queues, and frustration with waiting in line costs retailers billions in revenues each year. Too many retailers invest huge sums into the look and feel of stores, but neglect the pragmatic elements that can streamline the consumer experience.

In addition, many have been slow to adapt to consumer behavior and demand. Here’s an example. We are living in a digital era, yet half of U.K. small businesses only accept cash, even though the U.K. has one of the most advanced contactless infrastructures in the world, over 50 percent of UK adults carry less than £5 in cash and 54 percent of Europeans paid using a mobile device in 2016. It is this inherent conservatism and disconnect that is driving consumers away from the high street.

In-apptitude

It is not only the in-store payments experience, however, that poses challenges to retailers.

Despite the fact that consumers use their mobile devices more than their PCs, desktops account for 85% of online spending. In addition, 23 percent of users abandon mobile applications after only one use, and a staggering 86 percent have abandoned a mobile basket due to the frustration of a lengthy checkout experience. Even more concerning is that only 4 percent of small retailers even offer a mobile application that accepts payments.

It is clear, therefore, that retailers must rethink their approach to fully seize the m-commerce opportunity.

Despite the differences between in-store and in-app payments, the steps to improve them are the same. One is to remove as much friction as possible from the payments process to eliminate consumer frustration and prevent abandonment. Another is to enhance the ‘buying experience’ to make payments more than just, well, paying.

The road to invisible payments

The ‘contactless payments revolution’ has undoubtedly gone a long way to reducing friction across the payments ecosystem and shortening queues at the checkout. An advancing contactless infrastructure, an increase in near field communication (NFC)-enabled mobile devices and the launch of big name platforms has triggered explosive growth across the mobile payments industry.

And this is only the start. The wider integration of payments functionality into wearable technology is set to further streamline the checkout process, as the consumer does not have to rummage through their pocket in search of their device. This, coupled with innovations such as beacon technology (which underpins platforms such as Google’s Hands Free app), means that paying will soon require only the most limited consumer interaction.

In parallel, the introduction of ‘Buy with’ functionality within mobile applications by the OEM Pay platforms has simplified in-app purchases. Money 20/20 also saw some key announcements that will further streamline the in-app experience. EMVCo announced that its EMV 3DS 2.0 specification implements intelligent risk-based decisioning to encourage frictionless consumer authentication. The FIDO Alliance also confirmed it is working with EMVCo to enable consumers to conveniently use on-device authenticators, such as a fingerprint or “selfie” biometrics, to securely verify their presence when making an in-app payment.

With the infrastructure in place, retailers must be proactive and embrace these technologies to streamline the consumer experience and reduce checkout abandonment both in-store and in-app.

Making payments pay off

Simplicity of use, however, is only half the battle. Enhancing the buying experience is not new age marketing jargon (seriously), but rather a concrete means of integrating value-added services into the payments process to drive adoption.

The OEM Pay platforms and banks are leading the charge in delivering an added-value ‘buying experience’. For example, Android Pay automatically deploys loyalty points and applies offers, and initiatives such as ‘Android Pay Day’ offer monthly incentives. From the bank world, Royal Bank of Canada has integrated over 150 loyalty programs into its HCE wallet.

The future of retail payments

So, how are retail payments changing? A key takeaway from Money20/20 is that we can expect the concepts of in-store and in-app payments to become increasingly blurred.

For example, in-aisle payments enable retailers to combine the in-store experience with in-app convenience. Rather than queuing at the checkout, the consumer can simply scan the physical product within their mobile application, perform an in-app purchase and display their digital receipt upon leaving the store.

Predictive analytics and machine-learning are another avenue by which retailers can improve the consumer experience, with mobile applications leveraging past behavior to deliver smart recommendations.

In addition, augmented reality enables consumers to analyse product information and read reviews in-store and in real time, rather than having to research at home before heading out to the store.

The end of payments as we know it…and we feel fine

Whatever avenue mobile payments takes us down, it is clear that payments are undergoing an unprecedented period of transformation. Retailers, much like banks, are often accused of being conservative and resistant to change. But they now face a clear choice. Adapt or fall behind.

Money20/20 showcased a future in which payments are no longer a chore, but rather a rewarding experience. By moving quickly, embracing change and futureproofing their offering both in-app and in-store, retailers can find their place in this brave new world.

Source: http://www.mobilepaymentstoday.com/blogs/the-end-of-payments-as-we-know-it/


 

There’s a smartphone epidemic. So many people have them, and they are so engrossing, that smartphone users literally bump into each other when crossing the street or passing each other on a set of stairs. They’re communicating, they’re gaming, they’re researching and locating, they’re checking the weather, they’re shopping, they’re daydreaming, they’re doing everything with their enthralling phones… except paying. Or making eye contact.

What is the holdup in adopting mobile wallets? To be fair, a respectable 35 million consumers—22-plus percent of all smartphone owners—have gone so far as to provision a credit or debit card into a general purpose mobile wallet for use—maybe not for regular use, but at least they’ve tried it.

There’s been a ream of articles written about what it would take to get mobile wallets into wide adoption—and each article eloquently offers one piece of the puzzle. We’d like to posit that what it’s going to take to get the mobile wallet to replace the tattered leather one in your back pocket is… when everything that’s in your wallet is in your phone, and more. And everyone accepts that as reality.

Let’s make a checklist of what’s in your physical wallet now, and whether they are, or could easily be, in your phone. Credit cards? Check. Debit card? Check. Little scraps of paper with people’s names and phone numbers on them? Check. Frequent flyer, grocery, and other loyalty cards? Not yet. Gift cards that you never remember until after you’ve left the store? And how about your driver’s license? With this checklist, a picture of the real wallet, beyond just making payments, is beginning to form.

The mobile wallet needs to have a 360-degree view on the range of identifiers you keep in your physical wallet. You shouldn’t have to fumble for your credit cards, loyalty cards, or prepaid gift cards. You shouldn’t have to carry around your physical driver’s license or social security card. In a sense, it’s actually safer to have them stored electronically in a device you carry all the time anyway. A device that has already become a highly personal, unique object to you. Each smartphone owner has his or her own settings, apps, ringtones, wallpaper and background images. The phone is a personal statement about—an extension of—who they are.

So what is keeping people from using their smartphones as an all-the-time, functional mobile wallet? As we stated earlier, multiple factors are involved. Very often, their issuing bank has not integrated with one of the wallet providers, so they can’t provision a card into it. Another widespread reality is that the wallet is not accepted in many places. Without global acceptance across all merchants and services, it can never become as habitual as paying with physical money (either with credit cards or cash). Then there’s the limitation of only being able to have credit and debit cards in your phone, instead of having gift, loyalty, or other prepaid cards available, in digital format, for use anytime. Until you can get your license and Social Security card in there, it won’t be a true wallet.

Remember when you bought a word processor, a sort of proto-computer that was programmable but not connected to the internet? You may be too young to remember that, but in the not-too-distant past you had to have a different device to do your word processing, your spreadsheets, your faxing. (What is faxing? some young people will ask.) You kept your contacts in an ancient device called a Rolodex. Then along came Microsoft, and suddenly, it all came together in one place—a digital calendar, spreadsheets, word processing, email management (the modern equivalent of faxes)—the works. Now we have Windows10, the re-fulfillment of that intention, with its objective of making everything mobile, transportable, and interconnected—an integrated experience. It brings together news, music, photos, geographic status, email, texts… all in one cloud-based place.

Well, in just the same way, it all needs to come together in the mobile phone in order for mobile payments to be widely adopted by consumers and merchants. That level of nearly unconscious acceptance that we see with computers—is there anyone who doesn’t, at minimum, know the workings of a computer, or more likely owns several of them in some form?—needs to happen. Will economic history mark it as a bigger leap from cash to credit cards, or from cards to the mobile wallet?

Once the universality of structure is achieved, trust and acceptance will inevitably follow. And actually, it’s bound to happen: we will see a similar integrated capability where multiple payment and identifying forms—all the information that defines our commercial lives—reside in one place. The phone.

Source: http://www.mobilepaymentstoday.com/articles/what-do-consumers-know-about-their-phones-not-enough-to-leave-their-wallets-at-home/


Mobile wallets are slowly gaining adoption, but retailers’ offerings are currently the winners because they can be easily integrated with loyalty programs, providing an incentive to use them.

Many experts believe that mobile wallets will  continue to grow, and by the end of the decade, be universally adopted. Retailers such as Dunkin’ Donuts and Starbucks are leading the charge in terms of brand-led mobile wallets and are seeing significant adoption rates while platform-led services such as Apple Pay and Android Pay mobile wallets are lacking in comparison, but will likely see more users in the coming years.

“For merchant wallets, the vested interest in making them work and the ancillary benefits around marketing data garnered from wider use creates a broader demand in an organization to put incentives to put them in place and the mobile wallet investments successful,” said Joseph Walent, senior analyst of emerging technology advisory service at Mercator Advisory Group. “In my opinion, the main reason for the drag in universal wallet space remains lack of acceptance, be it real or perceived, coupled with a lack of marketing effort beyond the initial set-up the phone.

“While merchant specific wallets will likely top out in the next couple years, the usage of universal wallets will expand dramatically by the end of the decade,” he said.

Loyalty and mobile
Retailers can leverage mobile wallets to shape consumer behavior by prompting them to come in stores and purchase with rewards and the process of earning rewards. Mobile wallets and loyalty offer incentives for using the program, therefore consumers are more likely to leverage retailers’ mobile wallet programs as they have more to offer.

The mobile wallet applications are highly beneficial to retailers beyond just rewards programs. Retailers now have the ability to garner a wide range of data to better serve consumers and have the capability to send push notifications and keep them fully connected.

“Mobile wallets are a highly effective customer engagement tool,” said Danielle Brown, vice president of marketing at Points. “Through mobile wallets, marketers can reach consumers at the point of sale, through a channel that is most convenient and relevant to them.

“Not to mention, the convenience of being ‘mobile’ enables marketers to target consumers with greater precision and deliver hyper-relevant offers through geo-location targeting,” she said. “Additionally, when loyalty rewards are integrated with mobile wallets, they can be used to drive specific consumer behaviors.

“For example, marketers can incentivize mobile wallet use by incorporating existing loyalty programs and making targeted offers.” 

Millennials and mobile
Mobile wallets will likely see an uptick in consumer usage once all retailers have accepted NFC terminals and more NFC-enabled phones arrive on the scene. Apple is seeing growth with Apple Pay numbers, but mainly outside of the U.S.

Once consumers in the U.S. have gotten used to mobile payments and mobile wallets, there will be a drastic change with bricks-and-mortar retail. For now, the growth is steady and will likely see significant usage by 2020. 

Another significant factor for mobile wallet adoption is millennials and their spending. Millennials are not spending and valuing deals and savings rather than purchasing, but they are the demographic most likely to take on mobile wallets as they are more comfortable with technology.

As millennials grow older in age and become more comfortable with spending, mobile wallets will likely see greater adoption.

“Mobile wallets are growing steadily, Apple just reported some fairly strong results, particularly in non-U.S. markets,” said Thad Peterson, senior analyst at Aite Group. “Growth will continue as the next generation of NFC-enabled phones come online and as NFC-capable terminals are installed. It’s not going to be a ‘hockey stick’ growth rate, look for steady growth until around 2019-2020, then usage will ramp up. 

“We need three things to enable mobile wallets,” he said. “Critical mass of NFC-capable terminals at POS, critical mass of NFC-capable smartphones and millennials to move into a spending phase of their lives.

“Once those pieces are in place, mobile payment growth will accelerate.” 

 

Source: http://www.mobilecommercedaily.com/mobile-wallets-to-see-universal-adoption-by-end-of-decade