2014: The Year of Mobile Payments?

 A new year brings new activity and investment in the payment space… but perhaps not the kind we’re hoping for.  Recent announcements from major players as well as new product launches in the industry have arguably shifted the focus away from the mobile device and presented consumers with more options.  The good news: a more flexible environment for consumers in choosing their method of payment.  The bad news: slower adoption for turning smartphones into wallets.

Google, a first mover in mobile payments, recently began offering a physical card that is now compatible with Google Wallet.  Cardholders are able to transfer funds to their Google Wallet account from any bank account, credit card, or debit card for payment.  This allows for a single source of payment instead of carrying a number of credit or debit cards.  Furthermore, the Google card can be used at any merchant accepting MasterCard.  This means reluctant retailers will no longer need to upgrade terminals to be NFC compatible to accept this form of Google Wallet payment.  Users will still be subject to the same fees that apply to Google Wallet.  Transferring money from a bank account is free of charge; however, transferring from a credit or debit card incurs a 2.9 percent fee.  With this move, we see Google continue to widen their scope to encourage adoption, but it is likely not the direction the company hoped it would go when it first introduced Google Wallet in 2011.

Another player aiming to make strides in the payment space is newcomer Coin.  In November, the startup announced the upcoming launch of their digital payment card.   The announcement attracted considerable attention that resulted in near exhaustion of pre-order sales.  This is impressive considering Coin will set you back $50 now and $100 when it starts distributing the product in summer 2014. Coin will allow users to consolidate any number of credit or debit cards into one physical card.  Your smartphone is also a key component here. The Coin card will disable if your phone is out of your possession for longer than ten minutes.  So, if you leave your Coin card at your local watering hole, the card will lock and you’ll receive a notification on your phone.  This acts as a security feature but one that could become particularly bothersome if your phone runs out of battery or you aren’t the type to be permanently attached to your mobile.  It will be interesting to see if Coin is able to reach the adoption and usage threshold to become mainstream for payments.  Coin represents another solution that has a mobile component but keeps consumers attached to a physical card for payment.

On the other hand, all hope is not lost for a mobile-centric payment system.  Since the announcement of their iBeacon technology in June of 2013, Apple has made strides to expand this technology to allow a substantial proportion of consumers with Apple products the ability to pay using their mobile device.  iBeacon is currently compatible with devices running iOS7 – currently an estimated 200 million iPhones and iPads.  That said, it is important to consider that Android continues to maintain a higher market share in smartphones when compared to Apple (52.2 percent compared to 40.6 percent respectively[1]) but if Apple manages to pull off iBeacon in a meaningful way this could mean a launching pad for mobile payment adoption.

2014 could be the most significant year yet in payments.  Only time will tell if the smartphone will be the center of it, or if consumers will take baby steps toward full adoption.

 



[1] comScore Market Share Report December 2013

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Kelly Martin
About Kelly Martin 14 Articles
Having worked in both retail and commercial banking in the US, Kelly is passionate about product innovation in banking and payments. In her role as an Online Banking Product Manager for M&T Bank, Kelly roots her approach to product development in creating a rich and intuitive customer experience. The views and opinions expressed by Kelly are hers and in no way reflect those of M&T Bank.

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