Is 2015 the year of mobile payments? Will the launch of Apple Watch in April create a tipping point in consumer adoption? That question was on everyone’s mind as the recent Meet Up sponsored by Wipro Digital got underway. The invitation for the Meet Up titled, “Mobile Payments: Is the Enterprise Ready?” started with a discussion of Apple Pay, which like the front-runner in a presidential election, is the presumptive winner. But like a presidential race, there is plenty of time for a surprise candidate to come to the forefront.
Just this week, VentureBeat reported that Google might buy the struggling mobile payments outfit Softcard, a joint venture between Verizon, AT&T, and T-Mobile. At the time Apple Pay was announced last September, there was also a lot of press on the rival CurrentC network, a consortium of merchants, led by Walmart, that aims to skirt the credit card companies altogether. And yet, this holiday season Wipro Digital research found that only 3% of UK consumers and 4% of US consumers used any form of mobile payment.
The panelists at the Meet Up brought a variety of perspectives to the mobile payments discussion. Karen Pascoe (Group Head, Design and Implementation, Emerging Payments, MasterCard) noted that mobility enables cross channel experiences, because it requires the cloud to be the “control panel” for the Internet of Things.
The panelists and audience discussed the balance between security versus simplicity. Paul Karsten (Director of Engineering, Wipro Digital) noted that in the case of one of his bank clients, the “risk appetite” varies based on the function. For example, checking a bank balance would require fewer steps versus updating your account profile might require re-entering your password.
Leslie Brown (Director, Research & Consulting, B2C Sachs Insights) pointed out that more steps doesn’t necessarily mean it’s perceived as more complex by the consumer. In her experience, giving consumers a choice and taking an extra step or two actually increases their confidence and trust in the institution to know that their identity is being safeguarded by the mobile app.
An audience member asked, “What’s the problem we’re trying to solve for? Isn’t cash or credit card already a form of mobile payment?” Leslie noted that there are opportunities to streamline and simplify the experience. For example, it’s easier to carry one device versus multiple cards; and a transaction via mobile can occur any place, not only at checkout.
Karen brought up the digital divide in some regions and countries, where there is very limited access to banks, or many merchants don’t have point of sale systems. In these situations, the mobile network is the most inclusive enabler of commerce across the population.
Paul gave examples of other trends driving mobile and consequently mobile payments. Banks are recognizing that physical branches are much less important today than mobile access. This is a generational shift; young people rarely if ever go to a bank but they wan’t to transact or manage their finances via their phone or desktop. New applications like “Pay your friend” have taken hold in some regions. He also noted that these new consumer behaviors have placed a lot of stress on bank systems, which were designed a generation ago for overnight batch processing, and are constrained by legal restrictions that have not kept up with the times.
Some consumer behaviors vary greatly based on the category. Big ticket durable goods vs. small, consumables for example reflect different preferences. Also some brands have a very high level of identification for consumers, noted Leslie. So brands like Starbucks can get their loyalists to accept new ways of doing things where others cannot.
The Washington Post reported this week that Starbucks customers pay via their smartphones on average 7 million times per week. They have got people hooked not only on their caffeine but also on mobile interactions. The “My Starbucks Rewards” loyalty program has 9 million members! Starbucks has been making some aggressive moves in the mobile payments arena, and has also strengthened their management team including the announcement recently of former Microsoft and Juniper Networks executive Kevin Johnson to become the new Starbucks Chief Operating Officer.
Apple Pay may be the most prominent name today in mobile payments, and Google can’t be dismissed in this arena. But watch out for Starbucks, the other company with a track record of changing consumer’s daily behavior on a massive scale.