Despite the large splash caused by the September 2014 launch of Apple Pay, the general consensus is that mobile payment is still in the infancy stage. Amazon.com recently shut down the beta of Amazon Wallet, and Google Wallet and even Apple Pay have not yet achieved widespread use. CurrentC, the mobile payment service under development from the retailer consortium Merchant Customer Exchange, is still in pilot.
“In the U.S., the mobile payment field is still quite muddy, and there are more questions with fewer answers when it comes to which mobile payment solutions will be the frontrunners in this growing area,” said Perry Kramer, VP and practice lead, Boston Retail Partners.
But while mobile payment is growing at a tempo that is best described as “slow and low,” the overall market is getting increasingly competitive. At presstime, Samsung Electronics Corp. entered into a deal to acquire digital wallet platform LoopPay, reportedly to integrate the technology into one of its upcoming phones. And Visa Inc. revealed plans to expand its online payment service, Visa Checkout, to a total of 16 global markets by yearend.
One of the major impediments to the growth of mobile payment has been the expense and long testing/implementation cycle associated with the Near Field Communication (NFC) technology that is required to support most mobile payment solutions, according to Kramer.
But adoption should see an uptick this year. Boston Retail Partners data show that 10% of retailers support NFC payments today, and 35% plan to support them by October 2015.
“Like all significant changes in retail, consumers will drive the shift to mobile payments,” Kramer said.
He added that retailers are becoming more receptive to NFC-based mobile payment because it is often quicker than EMV-compliant card-base transactions, and they are already investing in POS upgrades to meet the October 2015 EMV compliance deadline.
Sucharita Mulpuru, senior analyst with Forrester Research, agrees that mobile payment adoption has so far come at a sluggish pace, despite the hype surrounding Apple Pay.
“I don’t think Apple Pay has really changed anything yet,” Mulpuru said. “It’s got people talking about mobile payment and there is excitement on the part of retailers and banks, but I don’t think consumer behavior has been changed at all. And retailers who are being circumspect about getting involved are realizing there’s not much in it for them.”
Mulpuru said “reducing friction,” often cited as a leading benefit of NFC-based mobile payment, is a compelling enough reason for retailer adoption. However, both she and Kramer noted that retailers are adding NFC readers as they overhaul POS systems to meet EMV compliance regulations. She also believes proprietary mobile payment systems launched by retailers may be a good option with better consumer tracking and rewards capabilities, but there are issues.
“The jury is still out on CurrentC,” Mulpuru said. “Softcard (formerly known as Isis) fell apart, so that doesn’t speak highly of consortiums. There are very few companies that have that Starbucks’ level of brand engagement, so there are very few cases where we could expect the same level of mobile engagement.”