July 16, 2015

Who Will Win the Mobile Payments Game?

The market is being flooded with mobile payments services, but without clear strategies customers may decide to stick with plastic and cash.

It’s harder than ever to keep up with what’s happening in the world of mobile payments. Apple and others have launched services that are supported by hundreds of thousands of retailers and hundreds of apps as well as impressive lists of card and payment provider partners.

And that’s not all. Samsung is set to launch its eponymous Samsung Pay, which uses Magnetic Secure Transmission (MST) so it will work at existing Point of Sale (PoS) terminals. Then there’s MCX, which is being developed and distributed by the merchants themselves and has been adopted by some big names, including Target.

Then there are retailers like Macy’s that are developing and expanding their own wallets, while the Starbucks version is widely seen as a world leader and one that may be offered to others as a white label product.

But with so many mobile payment options available now and in the near future, what will the impact be on customers, and who will ultimately win?

The Payments Puzzle Gets More Pieces
It remains to be seen what impact all this maneuvering by developers of various payment schemes will have on customers. Without a doubt, Apple’s focus on payment via phone has already educated the market and made the idea of paying with a device a safe and trusted option.

But with so many entrants and so many different ecosystems and payment schemes, will confused customers revert to reaching for their credit card? The answer is very possibly yes. In the push for simplicity, security and ubiquity, the major players might have achieved the opposite of making mobile payments the favorite way to pay.

The only hope, it would seem, is that all of the solutions work seamlessly together online or in store. This may seem a tall order since the companies involved are sworn enemies. However, someone else might be able to step in and provide the glue.

Keep it Simple
No less a player than Microsoft is beginning to make an interesting move in the payments space. Its approach is to make any payments solution it produces carrier agnostic. This is very clever, but in addition there is speculation that what Microsoft is really aiming for is the processing end of the market. This will put the company up against PayPal and Square, which probably worries them less than being up against Apple.

Whether Microsoft or someone else produces the platform on which all payments and all transfers can work seamlessly, it is important that it happens. If customers can wave their device, regardless of make, model and operating system, and pay without having to make a conscious choice, then mobile payments will indeed become ubiquitous.

If customers are at the mercy of merchants and whatever payment schemes they support, look for credit cards and cash to continue being the preferred form of payment.


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