Last week we asked a group of mobile payments insiders their views on the biggest stories or trends from 2013. This week, we turn our gaze to the future. Our contributors have again answered the call and offered some intriguing thoughts on what may happen in 2014.
Henry Helgeson, CEO, Merchant Warehouse
After Apple didn't include NFC on the iPhone 5S and iPhone 5C, a lot of people reacted by announcing the death of NFC. But don't write off NFC just yet. Google announced host card emulation, which allows NFC transactions to happen on NFC-enabled devices, without carriers getting in the way. ISIS also came out of its pilot efforts and rolled out nationwide, enabling some of the largest big-box retailers to offer NFC-based payments.
Combined with Strategy Analytics' prediction that one-third of the smartphones sold globally will support NFC, the market for the technology is huge. Large acquirers also continue to invest in mobile payment players and could drive adoption within their own merchant bases. Heartland's investment in Tabbed Out and First Data's acquisition of Perka are just two examples of these moves. NFC isn't dead, and I think we'll see the proof of this in 2014.
James Wester, Research Director-Global Payments, IDC Financial Insights
I think we'll see more emphasis on helping developers move payments further into the background. To this point, mobile payments have focused a great deal of attention on the payment itself, the technology and the method whereby a mobile payment occurs. For developers actually tasked with making payments happen, these discussions are almost counterproductive. They care more about integrating payments so that they happen as quickly and invisibly as possible. I think next year will see more efforts to give developers products that do just that.
David Schropfer, Mobile Commerce Head, The Luciano Group
I think the biggest news will have to do with EMV. Does the date of the liability shift remain October 2015, or is it postponed? Do retailers begin to purchase EMV terminals en masse, or do they continue to wait? Do banks begin issuing all credit and debit cards with an EMV chip, or are we still getting new credit cards with magnetic stripes at the end of 2014?
David Birch, Global Ambassador, Consult Hyperion
If MCX launches, that will be the biggest story, because it means a change in overall industry structure.
Jason Oxman, CEO, Electronic Transactions Association
I would say 2013 was the "year one" of the modern mobile payments era, and so looking ahead to 2014 I am very optimistic. If we look at the $4.6 trillion in payments processed in the U.S. in 2013, most estimates suggest that around $150 billion — a fraction of one percent — were mobile payments. Although some would say that is cause for pessimism, I think we are on the flat part of a hockey stick adoption curve.
Let's look at online retail by comparison — the commercial-use restriction on the Internet was lifted in 1995, giving rise to the first online commerce. And here we are, 18 years later, and we have just crossed the threshold where 10 percent of retail commerce in the U.S. in online — 90 percent is still conducted at brick-and-mortar retail. This despite the fact that computers are in more than 90 percent of U.S. homes, and more than half of Americans carry a broadband-enabled mobile device.
It took us 18 years to get to 10 percent online retail penetration. So I am very optimistic that our "year one" mobile payments numbers will grow from here — maybe not as fast as everyone would like, but would anyone really say that online commerce is a failure today? Given consumer love of electronic payments and mobile devices, I think mobile payments will move even more quickly to mainstream. I'm thrilled to be at ETA, the trade association of the payments technology industry, at such an exciting time of change in our industry.
Ron Shevlin, Senior Analyst, Aite Group
The biggest mobile payments news for 2014 will revolve around whatever Amazon does regarding a mobile wallet. It has an opportunity to shape the mobile shopping/purchasing experience like no other firm in the U.S. (and that includes Google).
Sam Maule, Managing Consultant, Carlisle & Gallagher Consulting Group Inc.
To quote Dr. Who's Cybermen: "You will be assimilated."
LifeLock and Lemon. PayPal and Braintree. PayPal and Stackmob. Amazon and GoPago. Look for more and more acquisitions of startups by non-traditional disruptors. Non-traditional players such as Google, PayPal, Amazon, Walmart (and yes, Apple) have the capital on hand to make these type of moves and don't carry the traditional risk-averse nature of traditional banking.
I wouldn't be surprised to see a major move with one of the larger mobile payments solutions; perhaps more of a true partnership than an acquisition. I'm not saying names, but if you recall, Square did team up with Starbucks (although not exactly the smoothest rollout).
Rakesh "Rocky" Agrawal, consultant focused on the intersection of local, social, mobile and payments
For 2014, I'm looking at the trend of using microlocation technology like iBeacon and PayPal Beacon to start gaining adoption. By knowing more precisely where a consumer is, we can take several steps out of the mobile payments process. And in mobile especially, every touch matters.
Alex Campbell, Co-founder and Chief Innovation Officer, Vibes
Apple's launch of iBeacons will all but secure Bluetooth Low Energy as the technology of choice for in-store mobile interaction.
- The mobile wallet will grow up (retailers will update point-of-sale systems to work better with mobile phones and better influence purchases);
- Mobile experiences will get more personal (through better analytics and CRM behavior);
- Mobile advertising will get more post-click support (post-click behavior will change the way mobile advertisers invest their money);
- Omnichannel retailing will accelerate mobile marketing (internally, mobile will spread across the whole marketing organization).
Will Graylin,CEO, LoopPay
Mobile checkout will become more and more important to mobile apps and mobile commerce. Convenient checkout for consumers on mobile is a requirement, and solutions like PayPal Express checkout are well positioned to take advantage of this trend.
More experiments will continue with different mobile payment methods at the point of sale (for example, barcodes solutions like MCX, Paydiant and LevelUp; check-in solutions like Beacon and Square; NFC solutions like Isis and Google Wallet). These examples will have limited merchant acceptance due to the high cost of changing merchant POS systems, thus limiting consumer satisfaction and adoption.
EMV migration in the U.S. will see continued delays, due to the cost of switching POS systems for merchants, the cost of cards and implementation to issuers, and regulatory uncertainties with Durbin.
NFC's migration will even be slower than EMV's migration given the two have completely different technologies and requirements on the acquiring and issuing side, and the method of loading cards is extremely complex.
NFC, EMV and magstripe will co-exist on the same terminal for decades to come, NFC being used at less than 10 percent of all merchants today. Note that out of 15.7 billion payment cards in circulation today worldwide, EMV cards represent only about 1.5 billion cards after two decades of migration; 90 percent of cards are mag stripe only, so do we really think mag stripe readers will disappear from POS terminals anytime soon — especially now that MSRs have become contactless receivers with security similar to NFC?
Jingming Li, Vice President, Alibaba Group
Mobile checkout experiences will be fast, easy and secure. As online businesses keep up with the demand for seamless mobile purchasing experiences, e-commerce changes are in store for 2014. Black Friday and Cyber Monday shopping trends are an indication of what's to come. In 2013, online sales on those days not only broke past records but sales made on mobile devices also shattered previous records. According to Adobe Digital Index 2013, 18.3 percent of Cyber Monday's sales were made on mobile devices, up 80 percent year-on-year. In 2014, businesses can expect even more sales and advertisement opportunities through mobile. They should optimize consumers' mobile checkout experiences and allow instant purchases through just a few clicks.
The use of mobile wallets, already popular in China, will increase in the U.S. This trend will catch on in the U.S. and challenge existing and new players to come up with products that are friendly to use and transform the way people pay, play, save and communicate.
Cross-border e-commerce will expand beyond anything we've seen so far. Technology is breaking down the barriers of global e-commerce. With the rise of new, digitally empowered consumers in BRIC countries and other emerging markets, in 2014 more U.S. businesses will seize this opportunity and enable consumers to buy directly. Companies will offer better payment mechanisms, acquire needed marketing knowledge and work with logistics partners based on different countries' market-entry conditions. This is no small task, but businesses will recognize that the opportunity is massive and the reward could be high.
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Cover photo: Bitterjug via Flickr