There's a Clear Path to Consumer Mobile Pay Adoption
Amongst all the hype and bluster around mobile payments, consumer adoption has lagged, and a fundamental question seems to be largely overlooked why use mobile payments?
There are many reasons that can convince consumers to leave cash and cards at home, and pay with mobile phones.
Mobile payments are secure.Nearly two thirds of consumers ite security as the main reason for not using mobile payments. While it is true that nothing is 100% secure, some payment methods are far more secure than others. For example, magnetic stripe swipe cards are not at all secure. They are easy to replicate and only require a signature as authentication. Mag stripe cards are the reason that half of the worlds credit card fraud is focused on the US, highlighting the importance of moving to more secure EMV chip cards. The cryptographic keys used in EMV make hacking the card too complicated and costly for most fraudsters.
The new wave of mobile payments solutions such as Apple Pay, Android Pay and Samsung Pay build on this technology and are very secure. This is because they are based on EMV and use tokenization. This process removes the funding card details, such as the card account number, from the transaction; they are not stored on the phone or shared with the retailer. This means that even if a transaction is compromised, the details obtained have very little value and cannot, for example, be used to make an eCommerce transaction.
In addition to these tokenization solutions, mobile payments software also incorporate extra layers of security, such as a PIN or biometric authentication. Apple Pay and Android Pay, for example, have the option to require a fingerprint to confirm a transaction and, when launched, so too will Samsung Pay.
Put simply, if consumers are worried about the security of mobile payments and have used a magnetic stripe swipe card in the last six months, they are worrying about the wrong thing.
Mobile wallets, not bulging wallets. Sometimes it is simply not practical to carry a wallet bursting with plastic cards particularly if youre partial to skinny jeans or a small handbag. 79% of people, however, have their phones on their person for 22 hours a day. Mobile wallets are therefore both convenient and practical as a stack of plastic, and can be loaded into a device that consumers have at all times. Is this the death knell for full pockets and overflowing handbags?
Mobile payments are quick and easy to set up. When opening a bank account, it can take days for a plastic card to arrive in the post, assuming it hasnt been stolen en-route. This is only a minor inconvenience for a new account, but can become a major issue when replacing a lost or stolen cardIn contrast, adding a card to a mobile phone takes less than a minute and can be done from anywhere.
The dynamic duo - mobile payments and value added services. If security, speed and convenience are not enough, then value added services may win consumers over. Loyalty schemes are a great example. Soon, the days of wading through countless plastic loyalty cards at the checkout may be over. Simply link your loyalty accounts to a particular payment card in your mobile wallet and earn points and rewards with a single tap.
In the future, we will also see a blurring of in-store, online, in-app m-commerce and e-commerce transactions, giving consumers greater flexibility.
Martin Cox is global head of sales for Bell ID.