Tech Bytes: Three Reasons Everyone Wants In on Mobile Payment

It’s not your imagination – a lot of new players are entering the mobile payment market. In the past few months, entities including Google, Samsung, Capital One, and J.P. Morgan Chase & Co have launched or announced plans to launch new mobile payment solutions. And retailer-backed Merchant Customer Exchange (MCX) expanded trials of its CurrentC mobile payment app this summer. Retailers like Starbucks are bypassing the middleman entirely and offering mobile payment from their own proprietary e-commerce apps.



So what is behind this upsurge in interest in the still-nascent mobile payments vertical, which has yet to become a widely used form of completing transactions? Here are three important reasons.



Nobody has claimed the space

When Apple launched Apple Pay in October 2014, the assumption was the mobile payment market had become spoken for. Although Apple Pay was preceded by mobile payment solutions such as Google Wallet, it carried the cachet of Apple and a huge built-in base of iOS users.



While Apple Pay is still generally considered the leading mobile payment app, it hardly dominates the space. There is not enough mobile payment activity yet for any one solution to be considered dominant. This power vacuum is drawing in seekers of the mobile payment throne, and will continue to do so until one or two leaders are officially anointed.



Mobile commerce keeps growing

Mobile payment app usage may not have reached critical mass, but mobile commerce is enjoying steady and impressive growth rates. According to recent data from membership-based retailer DirectBuy, 82% of smartphone users, or 166.2 million people, are shopping with mobile devices in 2015. And comScore data indicates mobile commerce is growing to 15% of total digital commerce.



That’s a lot of mobile transactions for mobile device and platform providers, banks, and retailers to get a piece of. One-touch payment, often featuring tokenization, remote shutdown and even biometric security features, stands a good chance of gaining traction as more consumers use their mobile phones to shop more frequently. When that happens, they stand to have plenty of choices.



Ancillary benefits

Mobile payment in and of itself is not likely to convince many consumers to select (or maintain) a specific device or credit card, or to use a specific retailer’s app. But it’s a nice ancillary benefit that offers consumers one more reason to do so.



As more players enter the mobile payment space, offering some type of dedicated app may become table stakes for anyone involved in mobile consumer services. A device or bank or retailer that does not offer mobile payment capability might be considered outdated in the near future.



Even in this theoretically fractured mobile payment market of the future, inevitably a small contingent of leaders (or perhaps just one leader) will emerge. Providers who get an early start are not guaranteed a leadership spot, but may hold an edge in obtaining one.