The introduction of Apple Pay has also thrust Near Field Communication-based contactless payment technology out of the wings and into the spotlight.
The resurgence of NFC technology at the point of sale represents the top trend in retail payments in the past year, and one that is likely to continue in 2015, according to Celent's annual report on payment technology trends.
Apple separately reported on Jan. 28 that two thirds of all contactless payments come through the Apple Pay wallet, citing data from the card networks.
NFC, which enables contactless payments while also allowing merchants to send promotional messages to the consumer's smartphone, has been a key element of several mobile wallet projects for many years. But many consumers still preferred the familiar process of swiping a plastic card at the point of sale.
Because NFC technology calls for terminal upgrades and until last year was not built into Apple handsets, many experts predicted mobile wallets would need to operate by displaying QR codes on a smartphone's screen or tapping into a cloud-based payment system.
"NFC naysayers may prove to be correct, however we see reasons to be optimistic, both about Apple Pay and NFC adoption overall," said Zil Bareisis, a London-based Celent analyst and author of the report.
The introduction of Host Card Emulation, a technology that bypasses the secure element on a handset and allows any application to initiate NFC transactions, will also play a major role in giving NFC a new lease on life. Before the implementation of HCE, the carrier network acted as a gatekeeper for any application that wanted to access the secure element.
Though HCE broke down some barriers to NFC use in mobile wallets, the difference is meaningless to the consumers and merchants that must change their habits if contactless payments are to flourish.
Apple Pay represents a major innovation "in how it is packaged and the way it works with customers," Bareisis said. It is a breakthrough for NFC at the point of sale, but it also works in-app to support mobile commerce, he added.
It is the in-app payments that fuel another top trend, creating what Celent calls "challengers at the POS."
Third-party providers such as PayPal, or merchants such as Starbucks and the companies behind the CurrentC wallet, typically call for software upgrades rather than major hardware upgrades at the point of sale. As such, they change the dynamics of the traditional POS, the report stated.
Starbucks is working hard to grow beyond the 16% of in-store sales it accepts through mobile devices.
More consumers will be able to use digital wallets for e-commerce, as many providers seek to simplify the checkout experience. Visa Checkout and Login and Pay with Amazon are among the newer low-friction checkout options. Twitter and Facebook are also working to expand their roles in online payments.
The ongoing debate about Bitcoin and its eventual role in mainstream payments will continue for years, Bareisis said. A more immediate concern in the U.S. is the shift to EMV-chip security.
"The average person on the street will hear more about EMV because they will have new cards and will be using them on new terminals," Bareisis said. "It will be a learning process, and a different behavior for those in the U.S."
Companies in the U.S. have until October 2015 to support EMV transactions, or they become liable for fraudulent transactions.
Throughout all of these changes at the point of sale, the card networks have worked hard to reinvent themselves.
"They have really become payment technology companies first and foremost because they have their fingers in many pies around digital technology and they are capitalizing on that," Bareisis said.
Getting Apple Pay to "play along on the card rails" and adopt the new tokenization system was a "major achievement" for the card brands, Bareisis added. "It was a very big win and something they will continue to push forward."