10 Mobile Pay Lessons from Money 20/20
Money 20/20, which took place in late October in Las Vegas, has in four short years become the premier global event focused on payments and financial services innovation, exploring the connected commerce concept as it unfolds at the intersection of mobile, retail, marketing services data and technology. Given that the event attracts 10,000-plus attendees, this means that there was no shortage of insights.
Here are a few 10 takeaways from my Money 20/20 experience:
Welcome to a new era of commerce
Poynt CEO Osama Bedier welcomed attendees during one of the keynote sessions to the “age of super convenience.” He said the upcoming millennial generation expects merchants to know them and treat them like the loyal consumer they are. “Millennials are not the shoppers of the future anymore,” Bedier said. “That future is already here.”
Enabling integrated commerce
The term “frictionless payments” has become somewhat of a cliché in recent years at payment affairs. Players across the ecosystem frequently debate how they, too, can master integrated commerce and become the next Uber or Airbnb of the world. Amazon’s Rich Koehler made a profound statement during one of the panels: “If it takes more than three taps to reach any part of your product catalogue, it basically doesn’t exist.”
Too early to crown mobile payments champion
As much as payments executives love to debate the winners and losers in this mobile payments game, the fact of the matter is that this industry remains in its nascent stage of development. “Stop calling the mobile payments game in the second inning,” Aunkur Arya, General Manager of Mobile for Braintree, told attendees at a panel discussion. “We are just getting started.”
Samsung Pay users heavily rely on MST
Global Co-GM of Samsung Pay Thomas Ko gave an update on the wallet’s adoption in the US. Early results in the US show that three-fourths of all transactions have been made leveraging the Magnetic Secure Transmission, which is a technology Samsung acquired in early 2015 to enable the wallet to work on existing mag stripe readers that are still popular in the US. He also highlighted a partnership with Synchrony Financial to bring loyalty and gift cards into the wallet — a move that could prove critical in the next-generation of mobile wallets.
Now arriving to mobile payments: Chase Pay
In a much-hyped keynote session, Gordon Smith, Chase’s CEO of Consumer and Community Banking, announced a partnership between the bank and the merchant-led consortium, Merchant Customer Exchange (MCX). He emphasized the partnership is about eliminating merchant and consumer pain points. For example, Chase Pay will come with no payment network, merchant-acquiring or charge back fees for merchants. The wallet will be linked to Chase’s 94 million credit, debit and pre-paid cards accounts in mid-2016.
MCX remains in pilot stage
MCX CEO Brian Mooney gave an update of its pilot in Columbus, Ohio, in which its Current C mobile wallet has been deployed across 200 locations in a variety of industry verticals. As he spoke of future plans to move toward a widespread commercial launch, he emphasized that all mobile payment players need to provide a “better value statement,” of which loyalty and incentives would be a key component. While the “Pays” provide the slick payments experience that garners headlines, CurrentC could provide the much-needed value add for both merchants and consumers, given that merchants know the consumers like no other player in this ecosystem.
Apple Pay expands beyond the US and UK
Although not formally announced at Money 20/20, news broke during the conference that Apple had overcome its impasse with card-issuing banks in Canada and Australia through a partnership with American Express. Partnering with a trusted payments brand like AmEx gives Apple access to the affluent cardholders in new markets as well as a network to process future transactions. Given that the mobile wallets from the likes of Apple rely on the existing card payment infrastructure to conduct transactions, partnerships like these are vital toward implementing its broader strategy.
Don’t forget bank-led mobile wallets
Although third-party apps from tech titans like Apple have garnered much of the attention when it comes to mobile payments that does not mean that banks have given up. Thanks to Host Card Emulation, banks no longer need to gain access to the secure element deep inside the phone in order to store the all-important payment information. As such, Capitol One, Barclaycard and Royal Bank of Canada all have recently announced plans for in-person mobile payment apps leveraging this technology. As much as consumers have a love-hate relationship with financial institutions, card-issuing banks still could have a much greater say in how mobile payments develop than simply supporting other third-party wallets.
Consumer still need a reason to adopt
There was much conversation about the impetus that will drive future adoption. Mobile payments cannot simply equate to the digitization of payments. Consumer uptake of mobile payments will be directly related to the value add received from using mobile phones in lieu of the leather wallet. In fact, roughly 50% of respondents in Euromonitor International’s recent Hyperconnectivity Survey said that a user-friendly mobile payments app and the ability to earn points and/or rewards through the app were two of most preferred features. Expect more loyalty driven mobile payment initiatives to arrive in the marketplace over the course of the next year.
Commerce applications of the future
While many attendees debated what it would take to tip adoption in terms of commerce unfolding via mobile devices, others focused even further out on the potential commerce devices of the future. For example, MasterCard unveiled secure payment prototypes in the form of rings, wristbands and car key fobs. Visa also had on display a vehicle to demonstrate the potential of commerce via internet-connected cars. The generational shift in payments only has just begun.