As I mentioned a couple of posts ago, our love affair with mobile technology shows no signs of fading. Our smartphones are essential tools for carrying out a huge range of everyday activities, from communicating with friends and family to checking the news to watching films and listening to music. And they’re becoming increasingly important when we go shopping, not only for reviewing items, checking products and redeeming offers, but also for making payments.
Shoppers in China and other APAC countries have enjoyed the benefits of mobile payments for a number of years now. In fact, China introduced payments via NFC as early as 2009 when it established the China National Advanced Payments System, which enabled businesses to easily develop and launch mobile payments, e-billing and real time payments. The West is playing catch-up to a degree – there are some lingering concerns about security - but over the last 18 months or so a number of mobile payment methods have emerged which have the potential to win over switched-on shoppers. Here’s an overview of the key players in the UK market:
Apple Pay is the latest to hit the headlines, and, as with all Apple launches, has caused the most noise in the retail market. It’s available on iPhone 6, 6 Plus and the Apple Watch - users add their credit/debit card details to make payments via NFC, by moving their phones close to a terminal. Security issues are overcome by the fact that card numbers aren’t sent anywhere – Apple Pay uses a substitute ‘token’ which is matched to your card number by your bank. Transactions are authenticated by thumbprint for an added layer of financial safety, and Apple doesn’t store any transaction details. And, unlike other contactless payment methods, there is no transaction limit because authentication acts in the same way as a PIN.
What’s good: It’s simple, secure and easily integrated into existing retail systems/apps – in fact, we enabled Apple Pay for Arcadia’s Topshop, Topman and Miss Selfridge apps ready for the UK launch day.
What’s not: One drawback is that not all bank cards are currently supported, though they should be ‘coming soon’. And, aside from having to have the latest iPhone or wearable, users might encounter issues with contactless terminals which have been capped at the usual maximum transaction of £20 (£30 by this September).
Paym was set up by the Payments Council in 2013 as a new way to make peer-to-peer payments of up to £250 using mobile phone numbers. The benefits for individuals are clear – making relatively small, one-off payments to babysitters, plumbers and other sole traders will become smooth and seamless, without the need to remember account numbers and sort codes or to dig around for a cheque book. Mobile phones have essentially reached 100% penetration in the UK, so it makes a lot of sense to use a unique mobile number as a single payment identity.
The visible advertising and support of major banks such as Barclays, Halifax and Lloyds helps people feel comfortable that mobile payments are secure and mainstream – similar to the evolution of eCommerce payments.
What’s good: It’s easy to remember, it can be ported to different providers (unlike email, Facebook, Twitter and so on), people are comfortable sharing their number with others and it has built in two-factor authentication (via SMS or phone call).
What’s not: Paym has not been communicated very well to the consumer – while most people will have access to it, many of them aren’t aware of this.Also,both payer and payee have to register with participating banks to use the service – it’s not as simple as just swapping mobile numbers. Business users cannot currently integrate Paym into their existing business payments process.
Google Wallet is another NFC-based mobile payment platform – one of the first to launch. Integrated with Gmail and available on a number of Android devices as well as the iPhone (though limited to sending money only), it allows users to store bank, loyalty and gift cards and to redeem sales promotions on their phone. But Google Wallet may be on the way out - later this year, Android is set to launch Android Pay as part of its updated Android M platform, which will use a token system similar to Apple Pay. It seems to have adopted a number of other Apple features as well, including thumbprint security.
What’s good: Google Wallet and Android Pay are similar to each other, so they will be familiar to users. The added security offered by the token system will be welcome.
What’s not: The fragmented nature of theAndroid mobile device market means that people who are used to having a lot of choice will be limited to handsets with thumbprint security if they want to use Android Pay safely.
PayPal, having reinvented itself as ‘the operating system for digital commerce’, recently bought Paydiant to act as its mobile payments platform. It enables merchants, banks and partners to quickly integrate mobile payments, offers, loyalty, and ATM cash access into retailers’ branded mobile apps. Security comes from the user’s mobile number and a dedicated PIN.
What’s good: PayPal is a very familiar, trusted way of making payments – it has been around since 1998.
What’s not: Conversely, PayPal has a somewhat chequered history with a number of controversies under its belt when it comes to customer service and dealing with issues. This may well be enough to put some users off.
While traditional payment methods still have the upper hand in most retail environments, these innovations in mobile payments are becoming more secure and more simple to use. It’s only a matter of time before they become part of our everyday mobile toolkit.