The Battle to Own Your Digital Wallet is On.
2016 will be a pivotal year for mobile payments, with total transaction values jumping 210 percent, according to eMarketer. Why? Mobile wallets — like Apple Pay, Android Pay, Samsung Pay and MCX — will become standard features on smartphones and more merchants will adopt point-of-sale systems that can accept mobile payments.
It makes sense then that this is a big story at Money20/20 in Las Vegas.
In keynote sessions Monday, JPMorgan Chase unveiled a payments service along with retail partners including Wal-Mart, Target and Shell. Chase may need the help — jumping into mobile payments means going head to head with companies like Apple, Google, PayPal and Samsung.
Chase Pay is the result of a new partnership between JPMorgan Chase and MCX, a conglomerate of major retailers that has so far failed to gain much traction in digital payments. The app will be available by mid-2016 and can be used for in-store, online and in-app purchases. It will be available to anyone with a Chase credit, debit and prepaid card account.
That kind of scale could be a key advantage — the bank counts 94 million customers, 1 out of every 2 households in the U.S. “Chase Pay solves a number of pain points for consumers and merchants. It will improve the customer experience and drive down the cost of payments,” said Gordon Smith, CEO of consumer and community banking at JPMorgan Chase.
In additional to scale, consumer trust may help Chase drive adoption. A new Phoenix study revealed at Money20/20 found that banks and card issuers, followed by PayPal, enjoy a trust advantage over other digital payments players. The study found that 64 percent of smartphone payment app users, or those interested in trying them, would consider downloading a bank’s payment app. Only about half that number said they would consider trying Apple Pay or Android Pay.
That relative level of comfort is something Google wants to change. The company’s senior vice president of ads and commerce, Sridhar Ramaswamy, will deliver a keynote Monday night in which he will lay out a vision for driving mobile commerce adoption with Android Pay, the newly relaunched Google Wallet.
Google has partnered with American Express, Discover, MasterCard and Visa to help them integrate Android Pay in the U.S., with plans to launch internationally in the future. Google is also working closely with AT&T, T-Mobile and Verizon Wireless to train sales reps to get customers set up with Apple Pay before leaving the store with a new device. Sridhar said there are now more than 1 million locations across the U.S. that accept tap and pay, with more being added every day.
Apple — though not officially represented at the event — was the subject of several panels and surveys. Forrester Research analyst Brendan Miller credits Apple with kick-starting the mobile wallet war with the launch of Apple Pay and believes it is best positioned to win. “They have the consumer base, they have the users,” said Miller.
“They brought together NFC technology, they brought together tokenization and biometrics and they combined those three things to create a really frictionless consumer experience at the point of sale,” said Miller.
The one to watch? It’s PayPal, according to Miller. “Paypal has been at this longer than anyone else. They have more mobile users than any of these competitors,” said Miller.
PayPal is a sponsor at the conference, and thus has a big presence: “PayPal was the original digital wallet and now has almost 170 million active ones that represent about 10 percent of e-commerce — $235 billion out of approximately $2.5 trillion,” said Anuj Nayar, senior director of communications and customer engagement.
“As we move to a mobile-first world, digital wallets will move from a nice have to a must have as people increasingly tap rather than type for their purchases and PayPal innovations such as One Touch make it even easier to buy from mobile,” said Nayar.
Samsung will take the stage later in the week to talk about Samsung Pay — its new payments app will be available to Samsung smartphone users starting Wednesday. The company is promising big news around payments.
It is clear the industry is gearing up for the more widespread adoption of digital payments promised by mobile-first millennials, but says Miller, mass adoption of mobile payments is still probably a decade away. “This is something the millennial generation is gonna drive because of their familiarity with mobile — it’s embedded in their life and they’re going to discover it and it’s going to be easier and more convenient.”
Image credit: CC by Vodafone Medien