The EU is looking for ways to help the retail sector and one of its tools could be a new cap on credit card fees. Although the European Commission has a chequered record in such matters, the new plan appears to resemble the EC’s roaming caps, which were a success.
For months now we’ve been reading very optimistic reports on the future of mobile payments and m-commerce, but one outfit is apparently looking beyond the hype. Research firm eMarketer has slashed its growth estimate for proximity mobile payments in half.
Last October eMarketer forecasted that mobile payments would hit $2.13 billion this year, but in its latest note it puts the figure at $1 billion. Although the number of mobile transactions has more than tripled over the past two years, growth is apparently slowing down, plagued by a multitude of issues.
The firm pointed out that delays and adoption issues are hampering growth. The fact that there are already several competing platforms isn’t helping, either. However, it is still looking good in the long run. By 2016 mobile transactions should hit 2016, roughly a year behind the previous eMarketer schedule. Just a year later, in 2017, mobile payments should hit $58 billion.
Aside from the usual hardware teething problems, mobile payment outfits need to address security concerns and streamline the process itself. At the moment, the user experience still involves too much friction, according to PayPal CTO James Barrese. The ultimate goal is to come up with a one-touch payment scheme that would be a lot simpler and quicker than the good old card swipe. That probably won’t come about soon, and maintaining a level of security deemed acceptable by consumers might be very challenging.
In addition, the fact that there are several players vying for their slice of the pie, using their own systems and infrastructure, means that there is plenty of room for consolidation, reckons Venture Beat. However, big players aren’t very open to consolidation, or even cooperation, hence it is very unlikely that a single platform can break out of the pack and transform itself into an industry standard.
The mobile wallet market is about to get big, huge even. According to a new report published by Transparency Market Research, the global mobile wallet market will reach $1,602.4 billion by 2018. In EMEA it will grow at a CAGR of 30.7 percent from 2012 to 2018 and EMEA will be the largest mobile wallet market in the world by 2018.
EMEA accounted for about 40 percent of the global mobile wallet share in 2011, but the Asia Pacific region is expected to see the fastest growth over the next five years.
The staggering figures sound optimistic to say the least, but Transparency Market Research is basing them on a few emerging trends that hold a lot of promise. The outfit found that affordable NFC enabled phones and POS (point of sale) systems will be the main drivers of growth over the next few years.
Retail is currently the biggest application for mobile wallet services and the trend is set to continue, due to ease of payment using smartphones and initiatives to introduce new POS terminals in convenience stores. Vending machines are also a potent market. Mobile network operators are expected to play a pivotal role in future mobile wallet adoption.
Unsurprisingly, the key players in the market will be Visa, MasterCard, American Express, PayPal, Google and others from the list of usual suspects.
However, it won’t be just smooth sailing. Quite a few consumers still don’t know how mobile wallets actually work and we’re pretty sure that many aren’t even aware of their existence. Security and privacy remain sources of concern, too.
Starbucks has started accepting contactless payments in more than 550 stores in the UK. Barclaycard Global Payment Acceptance and Visa Europe are behind the tap-to-pay system, which seems to be gaining traction.
Starbucks says that cash payments are losing popularity fast, as only one out of three transactions are made in cash nowadays.
The system should make card transactions even faster, cutting queue times. Starbucks said the rollout of contactless follows other innovations implemented in the past, including a bespoke mobile payment app.
“Contactless payments are changing the way we pay in the UK. Transaction numbers are growing rapidly and with more than one in four UK Visa cards now contactless we’re expecting usage to quadruple again by the end of 2013,” said Mark Austin, Vice President at Visa Europe. “We’re delighted that Starbucks is joining the growing number of retailers who now offer contactless payments to their customers.”
There are currently over 27 million Visa contactless cards issued in the UK and contactless payments are accepted at more than 250,000 terminals in the UK, including on London Buses, which have seen more than 2 million transactions since launching contactless payments in December 2012.
Starbucks is behind the times and doesn’t pay much corporation tax. 711s and Family Marts in old Taipei have been piloting a combined NFC card for metro and other transactions for years.
Payment gateway Authorize.Net is now available for British and European merchants, dealing in GBP, EUR and USD. Authorize.Net is a small business solution from CyberSource, a Visa company. It is a popular payment platform designed to accept and manage card transactions, fight fraud and automate recurring transactions.
Simon Stokes, managing director EMEA at CyberSource, said the platform is now able to cater to merchants of all sizes throughout the UK, ranging from home-based start-ups to the biggest enterprise merchants. He was quick to point out that Authorize.Net is the most popular payment gateway in the US. Currently more than 380,000 merchants use Authorize.Net stateside.
“We believe UK merchants will benefit greatly from Authorize.Net’s stability, ease of use, and award winning support,” said Stokes.
In addition to bank card processing, Authorize.Net also provides merchants with a virtual terminal and a website payments seal. It also supports recurring billing, a suit of fraud detection filters and secure data storage. CyberSource also likes to point out that Authorize.Net’s customer support has received quality awards for four years running, so timely support shouldn’t be an issue.
The Payments Innovation Jury, an anonymous group of 25 industry leaders gathered in a hollowed out volcano, reckons the next wave of e-payment innovation will come from Asia rather than Europe.
The secretive Payment Innovation Jury features members from 14 different countries whose names are kept private, so they can speak freely. Most members are or have been high level execs in companies such as MasterCard, PayPal and Visa, reports Venture Beat.
In their latest report, the jury concluded that NFC and digital wallets are overhyped, and we tend to agree. Most members don’t believe NFC will live up to its hype and many reckon there is no demonstrable need for contactless payments from consumers. However, it is worth noting that NFC has plenty of applications other than mobile payments. More than half of the group believe digital wallets will replace credit and debit card payments, but a sizable number don’t agree.
“The Jury offered their views on which payments innovation has the greatest hype rating and therefore the biggest risk that the business case will not be achieved,” the report said. “Hype is particularly prevalent in payments, with many organizations trying very hard to talk up their chosen innovation in order to achieve the necessary critical mass.”
In other words it is beast to tread carefully, just in case. Many outfits are indeed trying to talk up their solutions, but we are still a long way from widespread adoption and standardization. One jury member argued that progress in Europe is hampered by standardization initiatives such as SEPA, but a lot of innovation is expected from Asia and Africa.
Interestingly, the group found that cross-border remittance services have a lot of potential. Sending money abroad via mobile payment solutions could be the most profitable niche over the next five years. It is a rather big market. Plenty of countries in Eastern Europe, North Africa and practically the entire third world have sizable expat communities who send money back home on a regular basis.
A series of optimistic reports and forecasts on e-commerce seems to indicate that mobile payments are becoming increasingly commonplace and that we could soon ditch our trusty leather wallets in favour of smartphones. Sadly though, we won’t, at least not anytime soon.
The trend is positive and we are seeing a lot of growth, especially in m-commerce. In addition, a number of big players have made significant announcements in recent months. Last week Visa expanded its Visa Ready Partner Programme in an effort to get more vendors, developers and retailers on board. Samsung followed up with a service of its own, the Samsung Wallet, which bears more than a passing resemblance to Apple’s Passbook app. Samsung already managed to attract several partners for its new service, including Visa.
Then there is MasterCard’s MasterPass service, which allows retailers come up with their own applications and services, based on MasterCard’s infrastructure. PayPal is no newcomer to the market, but its PayPal Here service is. Launched in the US last year, it finally found its way across the pond to European shores. It offers a comprehensive solution, with a hardware dongle and cross-platform app support, and it allows users to pay using credit cards, cash, PayPall wallet or checks.
What about the elephant in the room? Well, there’s actually two elephants. Google Wallet has been around for quite a while, but it failed to take off. It was supposed to demonstrate NFC capabilities on Nexus gear, dating back to the Nexus S, which it did. However, much like NFC, Google Wallet never made much of a name for itself.
It might have something to do with the second elephant, Apple, as it never embraced NFC technology and it is still unclear whether the next iPhone will feature it. Apple has not made much noise on the mobile payment front, which doesn’t mean it is not looking into it. To the contrary, Apple has already filed several patents for NFC enabled devices and services. Cupertino doesn’t like spilling the beans on upcoming products and services, and unlike some companies, it tends to have excellent execution. It is also worth noting that Apple bought AuthenTec, a maker of fingerprint sensors and security solutions, for $356 million last year.
With all that in mind, nobody should be surprised by soaring m-commerce and mobile payments statistics. In fact, we should be seeing even more services, from brick and mortar shops to pubs, but we aren’t. Mobile payments and are still geeky turf, with little traction among mainstream consumers. The sheer lack of widespread support for m-commerce platforms and the fast pace of development means that many consumers don’t even know it exists. What’s more, many of those that do still have some reservations.
Privacy and security are valid concerns, but a recent survey by Intela revealed that the majority of smartphone users in the UK now feel comfortable with mobile payments. It is hardly surprising, as most smartphone users have grown accustomed to making micro transactions in app stores or through in-app payments. The difference between spending a few pence on an app and a few pounds in a retail shop is philosophical and not technical in nature. In fact, it appears that humble micro transactions have already done more for m-commerce confidence than all the fancy services rolled out by credit card companies and tech outfits.
In spite of that, smartphones will not replace wallets, at least not entirely and certainly not anytime soon. Cash can’t be hacked, it can’t be rendered useless by a flat battery or a few drops of lager. In some cases it is just more practical. The same pretty much goes for credit cards. Smartphones have their own set of advantages. Motorway tolls, public transportation, congestion charges and parking based on GPS information are some that come to mind. Phones are an excellent payment platform, but they will complement cash and cards, not replace them.
The Visa Ready Partner Program is designed to help device manufacturers, mobile networks and other partners to gain access to Visa intellectual property and licenses, including APIs and SDK’s for mobile point-of-sale payments.