Mobile Payments: Closer by the DayAlissa Saoutina |
Even though online shopping is growing, the majority of spend today is still generated from in-store purchases (94.22 percent in US according to eMarketer—a number which includes both cash and electronic payments) and the more insight companies can gain from today’s brick-and-mortar shoppers the more influence they can wield over changing shopping patterns.
The ability to influence means that companies that have been previously on the margins of the shopping (as opposed to the payments) experience, such as banks, networks and telecoms, can move to the center of the shopping life cycle and have an opportunity to generate revenue . Merchants are also using mobile payments as a way to keep the consumer in their shopping ecosystem—streamlining loyalty and customer service.
Since Apple popularized the iPhone, companies with little success but lots of determination have been looking for ways to get consumers to use the phone for payments. That’s because mobile payments, i.e., payments initiated with the mobile device as form factor, can bring consumers’ shopping ways under the microscope to be examined, experimented upon and evolved.
MasterCard’s Mobile Payments Readiness index cites the essential variable—“conditions on the ground”—such as the synergy between private enterprises and progressive regulation—as part of that array of factors necessary for consumer adoption. The latest development, known as Host Card Emulation (technology supported by MasterCard and other networks) will help move those conditions on the ground closer to helping build an ecosystem for mobile payments. The technology allows card data to be stored in the secure cloud rather than on the secure element (e.g. SIM card) on the phone.
By supporting the technology (HCE) that gives secure access to card data to the payments application developers and their customers (i.e., financial services institutions), payment networks and banks alike are hoping to speed along the development and adoption of mobile phone payment applications for consumers.