Prediction No. 1: Merchant- and bank-branded mobile wallets vs. third-party wallets.
• Apple Pay has some early momentum right now. They have created interest and that will drive consumer comfort with mobile payments – whether it’s Apple Pay, Google Wallet, Pay Pal, merchant-branded, bank-branded or other forms of mobile payment.
At the same time, merchants and banks are quickly recognizing that they do not want to be disintermediated from their customers.
• Merchant- and bank-branded wallets can offer consumers more reasons to use their mobile wallet than Apple Pay and other third-party wallets by combining ordering, loyalty, offers, payments and analytics. Plus they work with existing handsets and POS systems – appealing to a much larger base of consumers.
• The success of private label credit cards – more loyal customers, higher average purchase per visit, more profit – is likely to repeat itself in the mobile wallet space.
Prediction No. 2: Banks will finally begin to assert themselves in mobile payments.
• Apple Pay’s early success has their attention and many are worried they have “sold their soul to the devil.”
• Like merchants, banks are worried about being disintermediated from their customers.
• Banks are still consumers’ most trusted provider for financial services, including mobile payments and commerce – and are in the best position to coordinate the touchpoints required for broadscale adoption of mobile payments.
Prediction No. 3: There will be significant consolidation in the industry.
• There are hundreds of “mobile wallet” providers out there today – many with little/no understanding of what it really takes to connect with the payment ecosystem safely, securely and in a scalable manner.
Expect some to shine on their own and others to get acquired, but most will just cease to exist.
Prediction No. 4: Expect multiple mobile wallets in play for the long term. One size will not fit all.
• Consumers will want a choice – just like they do with credit cards, debit networks, gift cards and loyalty programs. The average American is carrying four or five cards in their wallet today.
• The Mobile wallet space will be similar. Consumers are likely to have one or two they use many places and others they use at specific stores because of the loyalty incentives; e.g. Target 5% off; Starbucks stars towards a free drink, etc.
• Five to 10 years from now, consumers will use four or five different mobile commerce apps – just like they do with credit cards – but everything will be available via a click on their phone.
• Consumers will base their preferences around the functionality, loyalty and incentives the apps offer. The payments part of it will be an afterthought.
• Retailer, bank and other third-party wallets will co-exist.
Prediction No. 5: More transactions will happen away from a traditional POS.
• Payments aren’t the only thing moving to mobile, the entire purchase experience is being transformed. (Uber, Subway Mobile Ordering, etc.)
• Payment is only part of the transformation as we move into a “post-POS” commerce experience.
• Consumers will spend less time waiting in line and more time using mobile to interact with their favorite retailers.
Prediction No. 6: NFC is here, but there are still many things you can’t do with it.
• A year ago I would have said NFC was up in the air. Now, of course, it’s here – at least for a few years.
• We’ll start to see some cool things with Bluetooth and QR codes – that NFC just cannot do.
• The right technology will be used for the right user experience.
In the end, the consumers win because there will be all sorts of neat ways to interact with banks and retailers through a mobile phone. Another reason plastic’s life will be short-lived.
Paydiant powers a white-label approach to mobile payments and wallets for some of the leading retailers, banks and technology providers in the U.S. including CapitalOne, MCX (CurrentC), Subway, Harris Teeter, Orange Leaf Yogurt and FIS. Co-founder Chris Gardner gave RCR his predictions regarding major developments he believes will drive the adoption of mobile commerce enablement in 2015.
