Mobile Payments Explosion Tipping Point?

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I argued in a previous post, see here, that we may be at a tipping point regarding mobile payments (in app, mobile web app, contactless, mobile wallets).

Many pundits and thought leaders have argued same for several years now. As usual anything that has to do with payments, especially retail payments takes a long time. I took a while for debit cards to take off, for EMV to be available in the US, and it is taking a while for consumer behaviors to adapt to contact less payments and in app payments off of a smartphone. Yet, once all vectors of change have come to maturation, explosive growth happens. It has always been so with retail card payments. And I use the word card to cover both physical cards and dematerialized cards.

Tim Cook labeled 2015 the year of Apple Pay, see here, and he may be on his way to be right, even though adoption has been slow and critics aplenty.

I also argued in my previous post that this next payments explosion will be helped by banks adopting mobile wallet technology as well as “playing” along within proprietary ecosystems such as those of Apple or Google. Banks are notoriously slow at rolling out new technologies to their users, and notoriously poor at doing so.  Hence, education is also key for average consumer to understand new ways of paying with their smartphones.

This article shows us the beginning of what education will mean – slow, cumbersome at first, isolated to a few banks and CUs, but make no mistake, this trend will grow and help consumers get comfortable.

Further, this article confirms my expectations that banks will roll out their own wallets. Chase is not small fish and although I do not expect them to be the one deciding factor to usher explosive growth, any additional bank or CU that pushes its own wallet and competes with the likes of Google Pay and Apple Pay is a positive for mobile payments – and not necessarily a negative for Google and Apple. The pie is way too big to only expect a handful of winners. The pie will just shift from physical card present and online card no present to mobile payments in their many different flavors. The question I ask myself is which major bank will push for its own mobile wallet next? Watch for further announcements soon I think.

If you needed further convincing on some of the trends supporting mobile payment growth, then read this good Nielsen piece here. Worth a read.

As a parting thought, I am starting to consider that EMV will be short lived as an evolutionary payment – not the only to think that mind you. When it comes to payments, and increasingly mobile payments, personal information is toxic waste as evidenced by all the data breaches happening in the space. No one wants to handle personal information and yet there is no solution, yet, that will allow for stopping the madness of handling personal information in a careless manner. Thusly, it is, IMHO, inevitable that tokenization will be adopted. Every mobile wallet announcement will include a tokenization solution.



Pascal Bouvier

Life and work experiences have given Pascal an unmatched vantage point, seeing things as both venture capitalist and aspiring entrepreneur. He currently is a Venture Partner with Santander Innoventures – Santander Group’s Global Fintech fund.

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