Too Much Noise in the Mobile Payments Space – Who is Designed to Win the Mobile Payments War?

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Smartphone adoption has grown exponentially over the past few years and more than 1.5 billion people across the globe find themselves constantly tethered to their device. Businesses are clamoring to take advantage of the extended reach that Internet-connected devices provide them and merchants realize that in order to increase revenues and stand apart from the competition they must offer the easiest possible way for consumers to make payments using their smartphones. As a result, the mobile payments industry seems to be taking of, and several companies have introduced mobile payment solutions in the last one year or so to capitalize on that trend. In fact, TrendForce forecasted a 37.8% year-on-year growth in the total value of global mobile payment transactions in 2016 — up to $620 billion from $450 billion last year.

While having options is typically a good thing, it has made it very hard for merchants to choose from the many mobile payment solutions available now in the marketplace. It has also forced the consumers to download multiple mobile wallets and apps and to set up just as many profiles. This has created much noise, fragmentation and confusion in the marketplace contributing significantly to slow adoption rates.

Lack of Ubiquity – OS, Device, Merchant, Bank, Network or Channel Specific

One of the biggest issues with the current landscape is that most mobile payment solutions are specific to an operating system, device, merchant, bank or network and are limited to in-store purchases. Apple Pay and Android Pay, for instance, are both operating system specific as they work only with the iOS and Android operating systems respectively. They both also require Near Field Communication (NFC) technology and they could work only in the less than 3 percent of physical stores where NFC terminals are present. The slow adoption of NFC by merchants is due to the significant costs associated with replacing existing terminals. Samsung Pay, on the other hand, employs Magnetic Secure Transmission (MST) technology, which is accepted at almost any card terminal but still falls under the limitation of in-store purchases with a Samsung device.

Mobile payment solutions like Walmart Pay are merchant specific. Solutions like Visa Checkout and Chase Mobile are network specific and bank specific respectively, thus creating limitations for both merchants and consumers.

Additionally, most mobile payment solutions only work in certain channels – for example, Apple Pay can only be used in physical stores and in-app purchases. PayPal, however, works predominantly online. The truth of the matter is, consumers are no longer shopping in one specific channel. Even though there are several channel-specific mobile payment solutions available, most companies are still trying to figure out how to sell effectively via social channels.

High Friction at the Point of Checkout

The compelling value proposition for consumers to make the switch to mobile payments has yet to be established in the case of physical stores where swiping a credit card is quick and easy. The friction consumers feel when shopping online, however, contributes to nearly 70 percent of abandoned shopping carts. This can present a huge challenge for those merchants that sell online. In order to significantly increase conversions, merchants need to present consumers with a payment option that has the fewest number of steps between item selection and payment. The need for a username and a password, as required by solutions like PayPal, creates additional friction.

Security Concerns

Several high-profile security breaches in the last couple of years–resulting in the loss of billions of dollars for merchants and the loss of identity information for consumers–have created security concerns in the minds of merchants and people alike. Several payment solution providers store card information in the cloud making themselves vulnerable leading to card theft. Although improvements have been made in terms of tokenizing and safeguarding card credentials, several solutions still use the combination of username and password for authentication, which is a weak security procedure. Using the smartphone’s advanced features such as its built-in biometric for authenticating  payments on any device, in any channel, and anywhere is a compelling value proposition.


We live in an age where the customer dictates the market and expects exceptional, seamless experiences every time, everywhere. If not achieved, the frustrated consumer will quickly abandon new technology for simpler, tried and trusted methods such as swiping or manual credit card entry. The mobile payment solutions that enable secure payments quickly and easily across devices, channels and merchants anytime and anywhere will win the mobile payments war.

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