Smartphones versus cash?

Device aims to rule as payment medium

It was a decisive step towards the creation of an ecosystem but that may not be sufficient as several solutions are available.

— anne bouverot

BARCELONA: Using your smartphone to make payments in shops or public transport should become more widespread this year, but its supremacy will depend on how successful retailers are in enticing people to keep their cards or cash in their pockets.

The stakes are high for phone manufacturers and operators, not to mention banks, as the success of contactless systems where consumers sweep their smartphone over a reader could shake up the lucrative retail payments market.

But the chief executive of Ingenico, a leading manufacturer of payment card terminals as well as new contactless systems, doesn’t see people as ready to give up their debit cards just yet.

“Smartphones will be a small part of the market but the main payment mechanism will remain the traditional (card) terminal which will continue to see growth,” said Philippe Lazare, whose company manufactures more than one in three payment terminals in use worldwide.

That view didn’t stop Ingenico from announcing this past week at the Mobile World Congress trade show in Barcelona a contactless payments system compatible with Apple Pay.

Apple’s adoption last year of NFC, or the near field communication standard, was a major step towards this becoming the dominant technology.

Google has had a similar service, Google Wallet, available for a couple years.

NFC allows smartphones or other devices to communicate with one another within a distance of several centimetres.

This means consumers can quickly sweep their phones over readers rather than having to pull out a card, insert it into a terminal and wait to punch in a code.

“It was a decisive step towards the creation of an ecosystem but that may not be sufficient as several solutions are available,” said Anne Bouverot, head of the GSMA trade association for mobile operators that organises the Barcelona event.

She said that it is also important to get people accustomed to using their phones for making payments by using them elsewhere, such as with public transportation systems that have adopted contactless technology like in London or Paris.

In launching Apple Pay, the US tech giant was again demonstrating its long-standing role as a trendsetter, rather than responding to consumer demand. It has yet to be rolled out anywhere except in the United States. — AFP