The Green Sheet Online Edition
November 09, 2015 • Issue 15:11:01
Opportunities, challenges for mobile payments
During a mid-October Strategic Leadership Forum hosted by the Electronic Transactions Association in Phoenix, executives from The Strawhecker Group, Verifone, Samsung Pay, LoopPay, and Vantiv gathered for a panel discussion titled Mobile Payments: From Buzzword to Business.
In an interview with The Green Sheet, SLF mobile panelist Jared Drieling, Business Intelligence Manager for The Strawhecker Group revealed key takeaways from the event and his own perspectives as a payments expert. Not surprisingly, the advancement of mobile and Europay, MasterCard and Visa (EMV) chip-card payment initiatives in the United States were core topics at the event. However, panelists also discussed business startups, funding, mergers and acquisitions, modern acquiring, big data and data security.
The mobile payment panel opened with a historical perspective on the evolution of mobile wallets and then debated what could delay mobile wallet adoption for making payments at physical stores. Drieling said the initial challenge for any emerging payment model is that all key stakeholders must first identify the value proposition to validate engaging the resources and infrastructure build out required to support it.
Friction for consumers
That is not to say key stakeholders have failed to budget for mobile payment solutions from Apple, Google and Samsung, because they have. Drieling said that with mobile wallets, merchants can benefit from integrated loyalty offerings, and acquirers and processors can enjoy stickier relationships with merchants. But a critical piece missing from the puzzle is how mobile payment models can benefit consumers.
Some have speculated that as U.S. consumers begin to embrace EMV in significant numbers, the push for mobile payments could reach a tipping point, but not immediately. And other factors must be considered before near field communication (NFC) mobile payments can take off in the United States, as has already happened in Canada, Australia and other parts of the globe that preceded us in EMV migration.
"I think EMV is a double-edge sword," Drieling said. "It provides some additional security, but from a consumer perspective it causes more friction. We're seeing transaction time anywhere between 3 to 10 seconds depending on the merchant and how well versed their staff is on EMV transactions. Essentially what that does is lower the bar for mobile wallets."
Common standard needed
Another challenge at the moment is the current lack of a common standard across different mobile wallet technologies. Drieling offered a vivid example of how this could present an ongoing dilemma for consumers and hindrance to mobile wallet adoption.
"As a consumer in the payments industry, I'd love to use my mobile wallet, but not all of my cards, whether credit or debit, support any single mobile wallet initiative, so there needs to be the infrastructure," he said. "I need all of my cards to be on the same page, then I need to know that all merchants can accept that. I don't want to bring my wallet and my mobile device and go back and forth between merchants and different technologies."
EMV first, then NFC
That lack of cohesion has proven to be the crux of lackluster mobile wallet adoption. But when asked how long it will take for mobile payments to ramp up, Drieling's response was somewhat promising. He believes if all stakeholders worked aggressively, mobile immersion could be achieved within 12 to 24 months; realistically, he expects it will take longer than that for the infrastructure to catch up from all sides of the equation.
"I think first and foremost we need the EMV rollout to be completed," Drieling said. "That's really taking time, not only from the payment providers but from the merchants as well. And that builds the infrastructure for those NFC-enabled mobile wallets. We need that infrastructure in place, and then the banks and merchants can jump in."
Perhaps in the not too distant future consumers, frustrated by long lines and impatient with processing times caused by EMV, will say: enough is enough; we want a better solution. As that predicted trend gains momentum in the United States, where every second matters, most agree that before this decade is over mobile wallets will become the new reality for many.
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