When Mobile Payments Today first published its annual Mobile Wallet Comparison Guide in 2015, a couple of different things were happening in the U.S. that should have propelled NFC-enabled proximity smartphone payments to new heights.
October 1, 2015. That date marked the true beginning of the EMV transition in the U.S.
The prevailing thought at the time among many payments industry executives was that NFC-enabled mobile payments would see a bump at the physical point of sale because merchants were installing terminals capable of accepting both EMV and contactless payments.
The other thing that happened during the EMV transition came on the consumer side and the clunky payment experience that emerged with the change. An EMV card dip became an exercise in patience as such a transaction took as long as 30 seconds or more to complete. Suddenly, a phone tap seemed like a much more practical, and better, payment experience.
But for multiple reasons, the bump never happened.
Some merchants never bothered to activate the contactless feature in their terminals. Retailers such a Target and Walmart eschewed NFC altogether in favor of each merchant's own proprietary mobile-payment system.
Consumers eventually adjusted to the clunky EMV payments experience, while the card networks deployed what's referred to as Quick Chip technology to lessen transaction times.
And while all this happened, some industry surveys showed less and less consumer enthusiasm for NFC-enabled mobile wallets such as Apple Pay, Google Pay and Samsung Pay.
The real kicker came in May when an eMarketer survey showed how consumers gravitated more towards the barcode-based Starbucks' mobile app than the NFC-enabled Pays. While that particular survey set off a whirlwind of opinions about how mobile wallet providers could improve their standing with consumers, the bottom line remains that this particular corner of the industry is stuck in a rut.
So, what happens now?
In the short-term, mobile wallet providers should take stock of their current offerings and re-evaluate what works and what doesn't. To this day, the Pays don't do much more than act as a direct replacement for plastic, which hasn't been enough to entice consumers to pay with their phones.
Discounts, loyalty-program plays and offers were once thought to be the golden goose needed to drive consumer adoption, but that hasn't been the case. Both Samsung Pay and Google Pay have some of these features in place, but it remains to be seen long-term whether these additions drive adoption and use.
Recent reports indicate Apple is ready to finally enable access to the secure element on the iPhone, which would open NFC access to third parties. Some industry experts believe that could be a much-needed godsend for NFC long term in the U.S.
As for the longer-term play for today's NFC wallet providers, perhaps a visit to China is in order.
Alipay and WeChat have found success in China for multiple reasons, some of which are unique to the region such as ginormous population, tech-savvy consumers and a payments infrastructure that is made for mobile. However, there is one thing mobile-payments providers outside of China could attempt to mimic: utility.
Alipay is the better comparison in this case because of parent company Alibaba's standing as both a financial and e-commerce powerhouse in China.
What helps to make Alipay unique are what are described as "sub applications" within the mobile wallet. There are 60 of them, which, include anything from an online travel agent called Fliggy, to the ability to pay for utilities and to book and pay for an Uber ride, just to name a few.
Alipay also has worked closely with merchant acquirers and retailers to help expand acceptance outside mainland China to part of Europe and North America.
Whether mobile wallet providers can mimic Alipay with such features will be a trend worth watching for the rest of 2018 and beyond.
And that brings us to this year's edition of the Mobile Wallet Comparison Guide.
We created the guide three years to act as a one-stop-shop for who's doing what with mobile wallets.
We asked mobile-wallet providers a wide range of questions about their product. Software developers provided us answers about their consumer-facing features as well as some other details that might not be important to everyday users such as security settings.
Our guide is intended to act as an introduction to these providers, not as a substitute for a comprehensive overview of each product. This guide offers just enough information to introduce you to this market and help you get started down the path to a possible partnership (or acquisition).
While NFC-enabled mobile wallets stagger in the U.S., they thrive in other countries such as Canada, the United Kingdom and parts of the Far East. Meantime, QR code-based mobile wallets have thrived in Africa, China, India and some Latin American countries.
As talk of a cashless society continues to proliferate, it will be up to mobile wallet providers to develop the features necessary to make this kind of chatter a reality. And to do so, mobile wallets have to be more about payments.
How do today's providers stack up to each other right now in that area? This guide acts as an answer to the question.
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