Why Mobile Payment Services Are Gaining Momentum
Why Mobile Payment Services Are Gaining Momentum
As more mobile wallet options become available, usage is expected to surge in the coming years. Here's a look at mobile wallet market and why consumers and merchants are eager to adopt mobile payments.
It's All About Near-Field Communication
In order to use a mobile wallet and actually make contactless payments, users need to have certain components. First, the user's device itself must contain a near-field communications (NFC) chip that "talks" to a credit card machine receiver. Information is passed wirelessly between the devices to make a payment. The wide adoption of NFC is what is enabling the deployment of wireless payments.
Apple Pay Sets the Wheels in Motion
Although talk of mobile wallets has been around for years and Google was a pioneer in this field with the Google Wallet app that it introduced in 2011, it was Apple Pay's launch in 2014 that added impetus to the adoption of mobile payments. Apple Pay allows iPhone and Apple Watch owners to make contactless payments at an increasingly large number of retailers around the U.S. Apple Pay also supports in-app purchases and can be used to buy virtual goods. The platform is arguably one of the more full-featured mobile wallets available now.
Google Introduces Android Pay
Google's Android Pay launched earlier this year to considerable fanfare. The service works with credit cards and store gift cards, and allows users to make purchases in a store or in an app. Most importantly, it's not locked into certain brands, so just about every major vendor, including HTC and Sony, can support the service.
Samsung Jumps Into the Market
Samsung Pay launched with support for the most retailers out of any of its competitors. This was mainly due to the fact that Samsung Pay works with older payment terminals that Apple Pay and Android Pay don't support. But this advantage will likely wane as merchants deploy new equipment. Like Apple Pay and Android Pay, the service can be used in-store. But be aware that, like the other platforms, it's only available on select devices.
Device Support Is Critical to Understand
For those wanting to use a mobile wallet service, it's important to know which devices actually support the respective services. For instance, Apple iPhone 6 and higher models along with the Apple Watch support Apple Pay. Samsung Pay works with the company's Galaxy S6 and Note 5 lines. Android Pay is deployed in a handful of products from device makers Sony and HTC, among others.
Biometrics Is One Component of Security
In many of the mobile wallets on the market, biometrics plays a critical role in their security. For Apple Pay, for instance, users will need to place their finger over their Touch ID button to complete a purchase. The same holds true for other popular payment platforms. Biometrics adds an extra layer of security that technically does a better job of protecting user credit card information.
Mobile Wallets Don't Expose Credit Card Data
One of the interesting things about mobile wallets is that they don't necessarily send over a person's credit card information. Instead, they send unique identifiers that verify a purchase. That unique identifier confirms that the person's account has available credit, and it completes the purchase. A person's actual credit card number is never exposed. That is arguably the most important security feature built into mobile wallets.
It's About Getting Retailers to Buy In
Not all retailers are so far willing to sign on to certain technologies, and the mobile wallet is one of them. In fact, for mobile wallets to be successful, companies like Apple and Google need to get more retailers to support their platforms through the card readers they use. While millions of locations already do, some have been reluctant to deploy the technology.
Expect Some Unlikely Devices to Support Mobile Wallets
In an odd twist, MasterCard announced in October that it is building a platform that will allow consumers to make mobile payments from a wide range of unlikely devices. The company showed off a ring that had mobile wallet support and said that it intends to bring other wearables and even fashion items into the fold. Smartphones and smartwatches may be the mobile wallets of choice today, but that will likely change soon.
How Will CurrentC Factor In?
CurrentC promises to be a potential game-changer in the mobile wallet market. The platform, which is being developed by the Merchant Customer Exchange (MCX), is made up of a consortium of major retailers, including Lowe's, Dunkin' Donuts and more. The companies are essentially building their own mobile payment platform to compete with Apple Pay and the others. Debate rages over whether CurrentC, with its big-time backers, will be a major player. For now, analysts and customers are waiting for its full release, likely in 2016.