Reasons Mobile Payments Still Haven’t Caught On

All Alerts, All The Time

Will mobile payment apps hail the arrival of mobile interruptions that never let up? Consumers worry that adopting a mobile wallet app will open them up to a barrage of alerts, sounding the alarm every time the local supermarket has toilet paper for half-off. The services can even track your purchases, opening the floodgates for targeted ads. Frequent alerts could be a deal breaker.

Battery Woes

As smartphones gets bigger, badder and more powerful, battery technology is struggling to keep up. That’s a problem if you want to make a call — but it could be an emergency if your smartphone is your wallet, too. Users are already scrambling to find a charging outlet by lunchtime. Soon, failure to recharge might mean you lack the funds to buy lunch in the first place. Meanwhile, credit cards never need a battery boost, and paper money has worked faithfully since well before the invention of the light bulb.

Do I Have The Right Phone?

You’re ready to make a mobile payment — but is your smartphone? Only the most popular new Android and Windows smartphones have NFC support to enable tap-to-pay services, and Apple has decided to forgo NFC altogether with its iPhone handsets. Users of budget smartphones are likewise out of luck. And though smartphones may seem ubiquitous, only a little more than half of U.S. adults have one.

Is It Secure?

Mobile payments open up a whole new frontier for fraudsters — or so cautious consumers worry. In fact, tap-to-pay technology is as secure as swiping a plastic bank card, and cloud services like PayPal Here support two-factor authentication for extra reassurance. Still, consumers worry their personal information could be intercepted during a transaction, and not everyone is convinced that Google can provide the same level of protection as their bank. But hope remains. The survey found about half of the most security-conscious respondents were much more likely to be interested in mobile payment options if they could be promised 100 percent fraud protection.

Limits, Limits, Limits

Even with a glut of mobile payment options, most lack at least one critical feature. Google’s Wallet app lets you stow your payment information in your phone to buy items in brick-and-mortar shops, but its touch-to-pay functionality is limited to Android devices on Sprint and other smaller carriers. Last year, Apple introduced Passbook, a mobile wallet app that lets users store gift card credits, loyalty card information and more on their iPhones — but only a handful of participating businesses support the app. The mobile payment model isn’t just fragmented — it’s fundamentally limited by countless companies competing for an ever-smaller piece of the pie.

Mobile What?

A recent CMB Consumer Pulse survey showed about half of smartphone users have never even heard of mobile payments. And of the 50 percent who have, a meager 8 percent said they’re familiar with the technology. Banks, credit card companies and others hoping to cash in on consumer interest will have to invest in better messaging first.

What Are The Perks?

Credit cards come with alluring perks — signing bonuses, cash back and travel accommodations, to name a few. But mobile payment systems have serious benefits. They can utilize GPS technology to direct you to deals, keep tabs on your bank account to alert you when you’re near your spending limit, and store unlimited receipts straight to the cloud. Businesses profit from mobile wallets, too, which often charge lower fees than credit card companies and encourage return trips by storing digital copies of loyalty cards.

What’s In It For Me?

To convince consumers to abandon trusted payment options for something new, companies must strike an undeniable value proposition. In the late ‘90s, electronic retail giants like Amazon compelled consumers to enter their 16-digit credit card numbers into online portals, opening up a whole new world of convenience with online shopping. But today’s consumers aren’t convinced that mobile wallets are any more convenient than their physical counterparts. Credit and debit cards already offer a speedy, reliable way to pay on the go. And since they’re accepted virtually everywhere, customers can fork over a card without worry or confusion. Convincing people that new technology is worth their time and effort might ultimately be the toughest nut to crack for mobile payment purveyors.

Where’s The Support?

Even the most enthusiastic adopters are out of luck if their favorite shops lack the infrastructure to process mobile payments. Big-box retailers sprang up in the infancy of computer technology, so joining the mobile payment revolution could necessitate updates to check out hardware and software. Mobile payments could be a boon to businesses, but installing the upgrades could be expensive and disruptive — especially when consumer interest remains low.

Which to Pick?

Even curious consumers are confounded by the array of mobile payment options available. Google, Visa, MasterCard and even mobile carriers like Sprint and Verizon are among the heavy hitters on the mobile payment scene, each offering a discrete service with different apps — and different rules. Some rely on Near Field Communication (NFC) technology that lets users simply tap their smartphone against a special reader to pay, while others offer up scannable QR codes. Mobile payments may never take off until one company rises above the rest with a single killer service.

Forget about cash or credit. In 2013, consumers can simply swipe or scan their smartphones at the checkout to pay. A huge array of mobile payment services have sprung up in recent years, urging customers to abandon their plastic credit cards for the “mobile wallet” revolution, but so far, adoption of mobile payment technology has been dismal.

Posted in e-commerce & m-commerce, Electronic Payments, Gift & Loyalty Card Processing, Internet Payment Gateway, Mobile Payments, Mobile Point of Sale, Near Field Communication, Smartphone Tagged with: alerts, Android, Apple, bank card, battery, cautious, consumers, crack, credit cards, deal, digital, fraud, gift card credits, google, GPS, information, Iphone, lower fees, loyalty cards, mobile, nfc, online, options, paper money, Passbook, payment, PayPal, personal, phone, plastic, portals, powerful, protection, purchases, secure, Smartphones, sprint, storing, support, Swiping, Tap to Pay, touch-to-pay, track, two-factor authentication, wallet, windows

As Capital One drops support Isis’ future darkens

As Capital One drops support Isis’ future darkens

Capital One pulling its support points to the challenges that near-field-communications is having with scale as non-NFC mobile wallet initiatives take off, as Isis gears up for a broader launch.

Capital One was one of Isis’ three founding card issuers, and the company’s drop of support as the company prepares for a larger roll-out emphasizes the challenges in gaining scale and momentum for mobile payments. PayPal and Apple’s recently announced their own mobile payment options that also avoid NFC reflect the opportunity that marketers see in services beyond NFC.

“Capital One dropping its support for Isis is significant in what it telegraphs about the problems issuers will continue to face with the wallet provider.” “Issuers must pay each time a consumer loads their card onto the wallet.”

“The caveat is that whether or not a consumer uses the card, the issuer must pay to have it in the Isis Wallet. Card issuers are interested in encouraging card spend whereas Isis is purely interested in getting consumers to link their cards to the wallet. This conflict of interest will continue to be problematic.”

Losing support
Capital One pulling its support from Isis could indicate that the financial institution did not see a substantial amount of consumers using their mobile devices to pay during the pilot for repeat visits, which is key in driving consumer adoption ahead. The number of mobile payment options available for card issuers to partner with is clearly growing, meaning that Capital One might see a bigger opportunity elsewhere.

However, Capital One’s pull-out could be well-timed since Isis is signing new partners, and Isis has an opportunity to recover quickly. “Many financial institutions and merchant acquirers see PayPal and Apple as threats and the moves that these companies are making could cause financial institutions, payment networks and acquirers to accelerate their mobile payments efforts in response to the perceived threat.” Since Isis is looking to partner with the financial institutions, payment networks and acquirers, the moves made by Apple and PayPal could drive partners into Isis’ embrace.

 

Google expands mobile wallet

Yesterday Google made a significant upgrade to Google Wallet that continues to focus on NFC, but also adds additional payment options for consumers. The Google Wallet app has been updated to let consumers send money to friends and family in the U.S. via an email address. Consumers can either send money directly from their bank account or from Google Wallet balance. Additionally, the app is now available for all Android devices that run the 2.3 operating system and higher. Previously, Google Wallet was only available on select Android devices. Consumers can also store loyalty cards from retailers that can be redeemed by scanning a mobile device in-store. Similar to Apple’s Passbook, Google Wallet will now also alert consumers when they are nearby to a store where they have a loyalty program.

Google said that it plans to support the one of 29 different NFC-enabled devices with NFC, but the company’s focus on additional features points to NFC as un-scalable by itself. In fact, Yankee Group estimates that 18 percent of device owners have a mobile device that supports NFC.

Apple, PayPal news
The interest around NFC has also significantly decreased as both PayPal and Apple are rolling out their own mobile payment options. For example, PayPal recently introduced its PayPal Beacon device that lets consumers pay hands-free in exchange for downloading the company’s app. The technology uses Bluetooth to pick up when a consumer is in-store to trigger a payment.

Apple is also working its way around NFC with its iBeacon technology that is rolling out in iOS 7. The technology lets marketers use Bluetooth around stores that can then be used to push out offers and relevant deals.

Both Apple and PayPal’s announcements emphasize the slow adoption that NFC has had in the United States. Although the technology has taken off internationally, it has had a harder time picking up steam in the U.S. because of the low number of NFC-enabled devices.

Broader roll-out
After running pilot programs, Isis is gearing up for a broader roll-out nationally. To date, most of the activity around mobile wallets has focused around the payment section of mobile wallets, which do not have as strong of a value proposition as the coupon and offers side that Isis is forced to prove to merchants.

Additionally, the education behind getting consumers aware of how to use the technology is still clunky, as evidenced by a test at a participating location in Austin by a local mobile consultant.

“Anything in the digital wallet space is a high-risk/high-reward venture at the moment and there are few if any profits being made in this space.” “When that is the case, business continuation is more a question of resolve than a question of competition.” Having multiple players in the market increases the overall quantity of marketing efforts that will take place in the mobile payments arena, increasing the probability that at least one product will succeed.

Posted in Credit card Processing, Credit Card Reader Terminal, Mobile Payments, Near Field Communication Tagged with: Apple, Capital One, google, ISIS, mobile, near field communications, nfc, Passbook, payment, PayPal, wallet, wallets