As mobile payment systems like Apple Pay and Samsung Pay gain traction in the mass market, rumors have swirled that credit card companies are looking to get in on the action as well.
To find out where these companies could fit into the mobile pay equation, Wireless Week reached out to Erik Burckart, CTO for mobile app development firm PointSource.
[Wireless Week] Why would a credit card company jump into the mobile payment space? Is it a natural transition from their mobile banking apps or does it require a significant technology investment? Are they operating through their own mobile pay apps or in partnership with payment options like Apple Pay and Samsung Pay?
[Erik Burckart] The mobile payments space is crowded, but with tons of opportunity. There are three players pushing into the market — the credit card companies, the device manufacturers (Apple, Google, and Samsung), and the payment gateway companies. While most people think about mobile payment opportunities in relation to point-of-sale solutions in retail, there are a lot of other opportunities. These include paying a friend for a service that traditionally saw check usage, paying jointly for a product or service with others, or gifting money to others. While the credit card companies often struggle to have the payment gateways to accept a diverse range of payments, they have opportunities to fill other solutions. Many of these solutions require a significant investment in their mobile banking strategy in order to become the go-to payment choice for their customers, rather than a banking app that may have other features the consumers ignore. If they want to enter the payments space, they will have an uphill battle with both the payment gateway and device manufacturers trying to capture that space, so they will need to find ways to differentiate. Companies like American Express have chosen to both partner and try some of their very own options.
[WW] What can credit card companies offer in the mobile payment space that companies like Apple and Samsung can’t?
[EB] Credit card companies can offer real-time transaction confirmation. American Express exposes this data through services like Apple Pay as well, but is not required to. Credit card companies can also offer simple account information, like balances, which Apple and Samsung cannot. Finally, banking institutions can solve other issues like peer-to-peer payments, which Apple and Samsung cannot.
[WW] What impact will mobile payment systems have on the future of retail?
[EB] The sheer amount of purchasing history and store based location data becoming available will allow for new models around cross-selling and upselling for retailers. We also should start to see the cash register transition out consistently around the US – who needs to stand in line for a cash register when you have a payment system in your pocket? Many places, like the Apple Store, have limited the number of cash registers and we expect that more companies will begin turning their employees into mobile point-of-sale agents.
[WW] How will mobile payment options contribute to the push toward Big Data and Mobile Advertising?
[EB] Purchasing data is becoming more available outside of the three institutions that used to have access to it — the seller, the payment gateway, and the credit card company. With more access to this data, people will begin to mine it to provide new offers and services for advertising on mobile devices. Imagine your device or service being practically free if you did enough purchasing on it and agree to get offers based on your purchases. Imagine that you went to a local coffee shop the past two afternoons – if Starbucks could give you an incentive to come in to their coffee shop instead, would they want them knowing you have been purchasing coffee in the afternoons? How much more valuable is that than the data they have available now? Business events will be generated based off mobile payment data and will be more valuable since they can cross reference your spending with your location and other behavior.
[WW] What do you see as the future of mobile payment?
[EB] Mobile payments are increasing dramatically and the convenience is drawing in more and more people. The changing EMV standards will further accelerate the adoption of mobile payments. However, customers will become increasingly dependent on technology, and the winners of the mobile payment battles will be those who offer simplicity and reliability to their customers. The future will be users paying for everything from a phone, including joint payments for services and paying peers.