While you may not have replaced your wallet with your smartphone just yet, there’s no denying that the universe of mobile payments is growing by leaps and bounds. According to recent research from eMarketer, the total value of proximity mobile payments in the U.S. — that is, point-of-sale transactions that use mobile phones as a payment method — will grow a whopping 210 percent in 2016 with 37.5 million U.S. mobile payment users and $27 billion in total transactions.
Not surprisingly, major industry players are betting big on those numbers in order to potentially become the top choice of consumers ready to tap their device instead of swiping their credit card at checkout. Technology leaders including Apple, Google (with its Android Pay) and Samsung are already front-and-center in the mobile payments space, while Amazon has already dipped its toes in and rumors have long been flying about Facebook’s efforts.
Banks such as Chase and Capital One have rolled out mobile wallets, while top retailers such as Walmart have put their own skin in the game — as well as MCX, the consortium of retailers (including Walmart) who have long been developing their own merchant-payment program, CurrentC, that is still only in a beta stage after wide-launch delays last year.
Clearly, consumers have more mobile payments choices than ever in 2016, but some experts maintain that none of these major-player options are a slam-dunk so far. “Apple Pay hasn’t really taken off so far, nor have any of these mobile wallets taken off in a big, meaningful way,” says Rajul Rana, CTO and partner at technology consultancy Liquidhub.
In addition, it’s unclear which of the offerings — among the “open loop” networks such as Apple Pay, Android Pay and Samsung Pay or the “closed loop” networks of retailers and banks — will be left standing in the long run. According to Bill Lewis, vice president of consulting at Capgemini, a “Darwinian shakeout” is on the way, with an “invisible negotiation” happening across influencers of mobile payments — customers, retailers, banks, credit card companies, technology providers and even payment processors. “There are leaders, but it’s not entirely clear which one or two will rise to the top,” he says.
What is clear, however, is what is at stake — the consumer, both through data insights and their long-term loyalty. Retailers such as Walmart, which recently introduced its Walmart Pay option through its mobile app, certainly may want to save the 2 percent interchange fee they pay to issuing banks by encouraging customers to move towards ACH payments. But what they are really looking for is consumer data insights, says Lewis. “The ‘open’ systems such as Apple Pay, Android Pay and Samsung Pay may not always provide retailers with the transaction insights they need to compete in the offline brick-and-mortar space,” he explains.
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