After delays, Isis will launch its NFC-based digital wallet in just two U.S cities.
After months of delays, Isis has announced the debut of its mobile payment system. A joint venture by AT&T, T-Mobile, and Verizon, Isis made news earlier this year at the Mobile World Congress in March, but has been pretty quiet since then. During that quiet period a number of other players in the mobile payment market have stolen the spotlight and announced major deals.
Apple is expected to eventually unveil its own mobile payment system, one that will most likely be based around the iTunes Store payment system, but hasn’t made announcements beyond iOS 6’s Passbook feature. Apple has also kept quiet about whether it will include NFC chips used in some mobile payment systems in the upcoming iPhone 5, which some analysts and pundits consider a barrier to entry into the mobile payment market.
PayPal looks to expand its mobile payment market share and features with an app-based payment trial at McDonald’s locations in France.
Square’s announcement of its partnership with Starbucks and the launch of new mobile payment company by several key retail and service chains were signs that the mobile payment industry and digital wallet concept is big business. Late last week, however, there was more news on the mobile payments front that proves that the race is far from over – one could even say that it’s barely started.
In a move that could make Square’s deal with Starbucks seem small and limited, Reuters reports that PayPal may soon be expanding its brand of mobile payments to include on the biggest fast food chains on the planet – McDonald’s. PayPal is currently testing a payment system in 30 McDonald’s locations in France. The company demoed the technology earlier this year.
Major retails join forces on mobile payments system to fend of Google, PayPal, Isis, and other potential digital wallet competitors like Apple.
In a move that makes the Square/Starbucks partnership announced last week look like small potatoes, a group of national and international retailers announced plans to develop their own mobile payment network complete with mobile apps and digital wallet functionality. The move seems almost certain to shake up the nascent mobile payments market where a wide range of companies and organizations have been trying to figure out the secret sauce that will turn mobile payments into a mainstream retail system for the past couple of years.
The Merchant Customer Exchange or MCX, as the new company is known, plans to deliver a solution that offers convenience in both making purchases and in receiving customizable offers from retailers. Development of a mobile app and payment network are underway, but MCX has yet to announce any details about either the app or its network.
Square scored its big partnership with Starbucks by realizing mobile payments aren’t really about mobile payments.
Last week’s announcement that Starbucks is partnering with Square for mobile payments and credit card processing is big news for the nascent U.S. mobile payments market. It was also a warning shot fired by the startup across the bow of traditional payment processing companies, many of which have struggled to bring together an effective and successful digital wallet (or iWallet) solution. The move could also complicate any plans that Apple has to move into that market following the release of iOS 6 and its Passbook feature.
O2 executive James Le Brocq points out what an iWallet needs in order to be a success.
Apple may be the only major company operating the mobile space that hasn’t announced a partnership or trial related to delivering mobile payments and creating an iWallet. While it seems a forgone conclusion that Apple will eventually enter the mobile payment market, a recent statement by James Le Brocq, managing director at O2 Money (a division of the U.K. mobile carrier O2) illustrates why Apple hasn’t yet entered the that market and why that’s a good move for Apple: consumers aren’t that interested in mobile payments.
With PayPal’s acquisition of card.io mobile credit/debit payments could become as easy as snapping a photo.
While Apple’s taking a wait and see approach to the nascent mobile payments and digital wallet industries, PayPal seems ready to launch an all-out offensive. In addition to its existing assortment of mobile, local, and online payment systems, PayPal announced this week that it is acquiring startup card.io.
card.io currently works with a range of iOS and Android developers to help them integrate mobile credit/debit card payment capabilities into their apps without the need of additional hardware like Square’s card reader or PayPal’s Here card reader. Instead, card.io’s partners use the built-in camera of an iPhone (or other iOS or Android device) to snap a photo of a credit card. The card number and related information is extracted and passed to a payment processor to complete the transaction (manual keying in a card number is also supported as a backup).
Despite new technologies for mobile payments, customers trust familiar companies like Apple.
PayPal, Amazon, and Apple are leading the mobile payment market according to IDC. The research company released the results of a business strategy study that focused on new and emerging payment technologies. The 2012 study is eighth year that IDC has conducted the survey, but it is the first year where mobile payments were a major focus.
While many efforts are underway to develop new payment technologies, many of them based around NFC, most new technologies have yet to catch on with consumers.
Overall mobile payments, however, are catching on with consumers. IDC reports that the number of individuals making mobile payments has doubled since last year’s report and that one-third (33%) of consumers have made some form of mobile payment. The data also shows that the mobile payments market is being led established players and existing technologies.
The mobile payment options becoming mainstream are the simplest and low-tech ones.
Read enough articles about NFC and its potential for mobile payments and you’ll find yourself thinking the technology is the inevitable mobile payment platform. Every major mobile platform except iOS already includes or will include support for NFC-enabled devices. There are lots of partnerships being announced between key players like device manufacturers, carriers, and banking or credit card companies. It also just seems to make sense that this is the future.
Until you look up from all the stories about what NFC and look at what’s really happening in the world. You don’t see much evidence of NFC payment systems in everyday life. NFC isn’t yet emerging into mainstream commerce, but there is ample evidence that mobile payments are taking off without it. Those options becoming mainstream are decidedly low tech by comparison, but that’s precisely why they’re succeeding.
There’s been a lot of talk over the past year or so about mobile payment systems and the concept of an iWallet. One of the challenges to any digital wallet concept is that it needs several components, most of which are provided by different companies and governed by different regulations. At a minimum, those components need to include on-device hardware, a mobile app or OS that can manage the transaction, a banking or credit card system that actually transfers money from your account to a retailer, support by major POS and cash register systems, and some mechanism for your phone to securely check-in with your selected account(s) to ensure money is available for purchases.
That’s a tall order and a lot of cooperation is needed when you have a different company providing each of those required functions. One way to simplify the process is to have one company deliver all or most of those functions on its own. There are few companies in the world that can pull all those capabilities together. One of them is Apple.