For example, when consumers use debit cards via Apple Pay to make purchases, they must take out their smartphones, use a thumbprint to unlock the phone and mobile wallet, select the card to use (if multiple cards are available), and hold their devices close to payment terminals. After transactions are made, consumers must usually still enter their PIN or provide a signature.
In other words, the mobile payment experience isn't that much better than using an actual credit or debit card, Miller says.
2. Mobile payments don't offer special incentives
Most mobile payment services and wallets don't offer enough added value to entice hesitant consumers. For example, mobile payment users typically can't redeem loyalty points or special offers at the PoS when making a purchases.
However, some branded mobile apps with payment features have successfully tied together loyalty programs and point redemption, according Miller. Starbucks's mobile app, for example, effectively combines the coffee chain's loyalty program with mobile payments, he says, but few such success stories exist.
"There needs to be an incentive for people to integrate mobile solutions and wallets into their everyday lives," says Maxime de Nanclas, COO and cofounder of Mobeewave, a startup that developed a mobile peer-to-peer payment application called PayMeTap. "Mobile wallets need to integrate a greater number of loyalty programs with major retailers. They need to provide value outside of consumer-retailer transactions."
3. Mobile payment infrastructure is slow to evolve
Mobile payments haven't become mainstream, because the infrastructure required to enable them is still evolving, according to Miller. For example, U.S. merchants have replaced or are currently replacing older PoS terminals with new ones that support credit and debit cards with embedded chips. Such cards are based on the Europay, MasterCard, and Visa (EMV) global standard, and they are designed to be more secure than magnetic-stripe cards.
The EMV standard is already widely deployed in many countries but is still being rolled out across the United States. As part of the transition, many U.S. businesses are moving to EMV terminals that also support Near Field Communication (NFC) transactions, Miller says. (NFC chips are built into many of the latest Android and iOS smartphones, as well as other devices, such as smartwatches.)
Consumer adoption of NFC-equipped smartphones is gaining momentum, and 50 percent of consumers in North America, Japan and a number of Western European countries are expected to use smartphones or wearables for mobile payments by 2018, according to Gartner. However, the transition to NFC-capable terminals will "take years" to complete, according to Miller, and that means it will also be years before proximity mobile payments take hold.
4. EMV transition won't help mobile payments
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