I attended the Mobile Contactless Payment Innovation Summit in San Francisco last week. The audience included representatives from payments companies, enablers, solution providers and merchants all engaged in mobile payments. Given the constant rate of innovation in mobile payments and recent network incentives for EMV in the US, there was a great deal to talk about.
At Glenbrook we help companies across the payments value chain to understand the future of the market; both the rate of adoption and the value proposition of new offerings are critical. As a result, I was delighted to moderate a panel on mobile and contactless payment innovation with panelists Marc Warshawsky of Bank of America, Peter Ho of Wells Fargo, Ed Busby from ISIS and Oscar Muñoz from CHARGE Anywhere.
Here are some key issues discussed both by the panel and at the event:
Heightened Expectations – As mobile smartphone adoption has exploded, the expectation of mobile payments has grown exponentially. Yet challenges related to technology standards, business models and merchant implementations have slowed progress. Some felt the problem is in consumer education and adoption , but clearly the mobile value proposition has yet to be discovered and defined.
Role of NFC – Throughout the conference, there were vocal detractors and advocates for NFC. Visa, MC and Discover have each laid out a contactless roadmap, providing financial incentives for merchants to deploy contactless (NFC) terminals. The technology is reasonably mature and effective with extensive trials around the globe; ISIS and Google Wallet are examples in the US. Trials demonstrate consistent consumer enthusiasm but handset manufacturers still rarely have NFC chips in new phone models. Why the delay? Most think the problem is in the business model. As long as carriers, handset manufacturers and banks are unclear on how they will realize incremental revenues from mobile payment, there is a hesitation to deploy at scale.
Mobile beyond NFC – Patrick Gauthier from PayPal started his presentation emphasizing the difference between NFC and mobile wallets. He demonstrated that there are other ways to access the wallet. With more active accounts than American Express has cards in hand, PayPal’s cloud-based model is a significant alternative to the physical card-centric NFC approach. Peter Ho discussed Wells Fargo’s experiences with using In2Pay microSD card for Visa payWave transactions attached to a Wells Fargo account as compared to NFC. Either technology supports the desired interaction and he suggested the decisions were more around creating the right consumer experience. Other alternatives to NFC include the barcode model (also known as the Starbucks Example). One constraint to adoption of mobile is the speed at which merchants can implement the technology at POS. Merchants have to sort through the hype, identify mandates and ultimately prioritize their investments.
Are we just sticking a credit card on the phone? – Card issuers in particular were concerned with enabling card transactions over the phone. These models are expensive to merchants as they move card present, in store transactions to what they expect will be card not present interchange. So is there value in a mobile transaction and perhaps even room for more fees? Value in a mobile payment needs to be found in the added functionality brought from the phone. Location, data, computing power and Internet capabilities augment the in-store transaction. Bill Gajda from Visa was clear “it’s about more than replacing a swipe with a tap”.