The introduction of Apple Pay as a mobile wallet competitor illustrates that the payments landscape calls for partnerships and collaboration, rather than a winner take all mentality.
Rather than sparking images of a heightened mobile wallet war by treading onto turf on which Google Wallet and Softcard (previously Isis) had garnered the most attention, Apples moves resulted in a classic ecosystem play, said LoopPay CEO Will Graylin during the annual Mobilizing Retail conference in Chicago. The development of a mobile wallet cant happen without other players in the ecosystem.
Apple landed partnerships with MasterCard and Visa for security and transaction rails, as well as with issuing banks, in introducing its Near Field Communication-powered mobile pay system.
If one provider tries to dominate the market, the entire ecosystem will change and, ultimately, everyone suffers, Graylin said during a discussion at the annual Mobilizing Retail conference in Chicago. Graylins company introduced its mobile wallet and payment method in February.
Consumer preference for a mobile wallet will drive companies to seek the correct partners and open their product to other payment mechanisms, said David Baldwin, in charge of POS experience and partner development for Softcard.
If we want to be an open platform at Softcard, which we say we are, and consumers say they want PayPal in our wallet, then we have to talk to PayPal about that, Baldwin added.
Discussions amongst competing payments companies are taking place across the board, Baldwin said. Its a matter of determining what you do well, and then finding out what others can do well.
Natural alliances will occur, and some will surprise, Baldwin added. The blur in those lines between competitors will increase, he said.
If one issuer or one merchant tried to stand out above others with a branded mobile wallet, it would be too difficult to accomplish scale, Baldwin added. Even the CurrentC model for the Merchant Customer Exchange would find it hard to reach scale without others in the ecosystem involved, Baldwin said. A mobile wallet has to play with all of the networks.
Partnerships and alliances generally fortify critical aspects of a mobile wallet initiative, such as security.
The security factor is the single biggest impediment for consumer adoption of a mobile wallet, said Greg Tennant, senior vice president of marketing for security firm Cybera.
Consumer confidence has been shaken because merchants cannot secure their own networks, Tennant said. A mobile wallet is one level of complexity being laid upon an already very complex architecture, Tennant added.
Merchants need multiple apps to come together for payment, loyalty and security, Tennant said. As you get more complex, it increases vulnerability, Tennant added.
Also, Apple doesnt do things without expecting change, said Jacqueline Chilton, retail and payments consultant for Yountville, Calif.-based Muration Group. We predict that five years after Apple Pay, we will all be doing tap-and-go payments.
As such, numerous players and partners will enter the landscape with other uses for NFC that will complement the payment mechanism in a mobile wallet, Chilton said.
Those uses include being able to store a drivers license in a mobile wallet, using the phone to open doors, board planes and pay for taxi rides, Chilton added.