Samsung Pay, Android Pay, Apple Pay, CurrentC, PayPal Wallet, Coin Card, Swyp Card, Plastic Card, Stratos Card. Choices in the payments industry are almost as numerous and varied as those in the 2016 American Presidential elections. Even if you’ve never heard of the paradox of choice, it wouldn’t take much to realize consumers are having a hard time picking a favorite. However, the problem with payments is more complex than selection.
The Trust Issue
Payments solutions are something of a touchy area even for the most early adopting, technologically forward-thinking types.
Drones with potential to be weapons of mass destruction are OK because who doesn’t have fun playing with a mini-helicopter. Autonomous cars powered by highly questionable software definitely get a pass because the promise of a lazy future is too hard to refuse. But the risk of losing even a single dollar to poorly thought out digital payments methods is too much of a gamble for most people.
And there’s good reason for that. Mobile payments are tough to get behind in their current state, security being the primary stumbling block for most potential users. Ashley Madison was a lurid example of how embarrassingly insecure data is online. Monetary information is probably the most risk-sensitive data using which transactions on the Internet are made. Handing over such information to an entity that can’t insure it for risk is understandably a scary prospect.
Have Some Standards
Innovation and adoption in the mobile payments space has also been hamstrung by the lack of standardization. It’s like electric vehicles – if there isn’t standardized technology for charging stations and ports, it doesn’t matter how pretty or efficient the vehicles themselves are. In mobile payments, there’s NFC, tokenization, MST (Magnetic Secure Transmission), QR, biometrics, and a host of other specifics of implementation on which each mobile payments offering differs. As long as different networks, phone manufacturers, and operating system makers can’t agree on at least fundamental technologies, there isn’t going to be a definitive tap-and-pay solution for customers.
Appifying the Wallet
While industry giants are held up in a game of one-upmanship, certain merchants have realized the potential of branded payment apps over mobile wallets.
Mobile wallets are an attempt at replacing physical wallets. They’re supposed to make the purchasing process easier no matter what the item in question is. Payments apps, on the other hand, are a lot more specialized. They’re vendor-specific and tie in seamlessly with overall marketing strategy. While some mobile wallets have had success signing up merchants, they haven’t been able to model the service to fit their needs as yet.
Starbucks is a prime example of a seller that has chosen to bypass a mobile wallet for its own payments app. As of last week, Starbucks implemented a mobile (pre) ordering and payment system for its customers in the United States and some locations in Canada. Not only does this make paying for a coffee easy, it also cuts out the time spent in a line at stores.
More importantly for Starbucks, its branded payment options gives it a dependable way to track user activity and reward the loyal ones. Gamifying the purchasing process and then fostering brand advocacy is made a lot easier with a bespoke application usable across platforms.
Though branded payment apps offer certain features that mobile wallets won’t have for a while, they won’t necessarily become the de facto choice for retailers. Mobile wallets, at the moment, are the simpler, cheaper alternative. Merchants that have simple loyalty programmes and frugal marketing budgets are likely to choose a plug-and-play option like Apple Pay over a branded app.
The point of all this of course, is to make monetary transactions simpler and safer. The cleanest solution, at least in theory, is a mobile wallet. Otherwise we’ll all be left with a bunch of apps by a bunch of different vendors and maybe a few extra cups of coffee in loyalty rewards.
However, as long as security and adoption issues persist, branded apps may be the way to go. And realistically, who doesn’t like free coffee.
Prateek Jose is a writer and engineering undergrad from India with an unhealthy obsession for obscure historical trivia. Conversations about absurdist fiction and the technological singularity make his day. He’s already uploading parts of his brain to servers by writing for websites such as this one.
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Trust is huge. But, look how long it took for our parents to finally pay for something online? Now, I can barely get my dad to buy ANYTHING in a retail store. It is always about, “price matching” someplace else or online.
Do you think that we are going to see more branded money/wallet apps in the future? Much like how every store has a loyalty card, now you can pay at Starbucks with their app, but them pay at Target with the app they created. That might be a beautiful mess.
For me, I could care less which one I am using. They are all going to do the most simple of things anyways. Any other features are just to get your attention, but they are likely not needed to support the main thing.
With mobile banking and payments trending worldwide, the need for mobile security becomes much more critical. Payment companies and Consumers need to realize that security cannot be replaced by convenience. The need of the hour is to be aware and proactive about the same. We at Appknox (www.appknox) provide peace of mind to the top banks and mobile payment companies by doing a regular security audit of their mobile apps and alerting them to new vulnerabilities as they arise.
Interesting article. I think the next technology to take off will be the one that everyone adopts. I think we’re seeing a little bit of a betamax vs vhs war except instead of two players there are a handful going at it. They are essentially the same thing, but the consumers don’t want to adopt it yet, and the retailers don’t want to either as it’s easier to just take credit cards at this point. Wasn’t that one of the big reasons behind the home depot and target hacks? The corporate resistance to updating the techonology? Take a new technology that may or may not have holes and you have the same problem. I can’t help think about bitcoin and the numerous other altcoins that have sprung up. Sure, they pose a threat to the banking system, but if no one adopts them except for a small dedicated group of online activists, what’s the point?