Mobile pay still waiting to take off
Just 10% use smartphone payments now, but momentum is building
LAS VEGAS – Paying with your phone at a retailer is faster than pulling out and swiping a credit card, yet despite an aggressive rollout by companies such as Apple, Samsung and Google, it has never taken off, with just 10% of consumers paying with mobile.
The reason? Not enough incentive for consumers to make the switch and set up their phones to pay.
That hasn’t stopped hundreds of companies from trying to tweak the technology that will get consumers to ditch plastic when they’re at the grocery store, mall or gas station.
When consumers use mobile payments, they can be pitched deals while they shop, thanks to the location data a smartphone (as opposed to a credit card) provides. That’s why, in part, giants like McDonald’s, Whole Foods, Trader Joe’s, Chevron Gas stations, Walgreens and Panera Bread offer contactless payment systems at their stores.
“Every year, we say this is the year mobile pay will really take off,” says Jordan McKee of 451 Research. “But the credit card still works well. There’s nothing wrong with it.”
Paying for goods with your smartphone or smart watch is still early, but it is starting to see “pockets” of success, Spencer Spinell, a director of emerging platforms for Google, which offers the Android Pay service for Android phones, said recently at an industry conference.
According to 451 Research, less than 10% of U.S. consumers pay with mobile, and only 25% of U.S. retailers even offer the contactless terminals.
Those pockets are small. And they are mostly in Asia, where apps like WeChat and Alibaba’s Alipay have found greater popularity with mobile shoppers as a feature within very popular messaging apps.
According to 451, only 25% of U.S. retailers even offer the contactless terminals that accept mobile payments. (Missing in action — giants like CVS, Home Depot, Target and Burger King.)
If the recent Money2020 conference is any indication, tech companies clearly are not giving up:
Biometrics. The new iPhone X, out in November, unlocks the device with facial recognition, which Apple says is safer and more reliable than the old way, the thumbprint.
Many of the firms exhibiting here say facial recognition just isn’t enough. Like two-factor authentication, in which you have to log in twice with passwords to connect to a website, they believe the even more effective way to connect is a combination of signing in with your eyes, facial expressions and voice.
“A single biometric does not work,” says Rob Douglas, CEO of Toronto-based start-up BioConnect. His firm showed off a platform that registers a user of a phone by blinking the eyes, moving the face back and forth and reading numbers and words aloud.
With traditional biometrics, a person could add his fingerprint to someone else’s phone. “We make sure it really is you,” Douglas says.
Fingerprint. An entrepreneur from the United Kingdom brought his “FingoPay,” a fingerprint reader for those who don’t want to bother with having their phones or even credit cards nearby. After your finger is matched to the credit card, you’re in business. “If someone takes your mobile phone, you’ve lost the ability to pay” with traditional methods, says Nick
Dryden of FingoPay. With his system, “you become the wallet.”
Implanted chips. The Wisconsin team that implanted microchips in their employees over the summer were at Money2020, saying their way to pay — by placing your implanted hand over a sensor — was more efficient than mobile pay. “Way easier,” says Third Square Market president Patrick McMullen.
Siri. Royal Bank of Canada recently launched a service using Apple’s voice-enabled assistant Siri to pay bills by ordering it to do so on the phone. Rami Thabet, RBC’s vice president of mobile, said that since dipping its toes into voice pay, “we’ve seen consistent growth.”
Traditional credit card firms. Visa and Mastercard were at the conference, showing concept solutions that use biometrics and voice to authenticate a transaction to a consumer base weary of incidents of massive retail fraud in the past few years at everywhere from Target and TJ Maxx to Sonic and Chipotle.
Mastercard, which just announced that it was ditching the relic of another era — the signature — to authenticate a transaction in April, displayed new concepts in shopping via augmented reality (mixing animation and real life) and virtual reality (don a headset and bring the shopping to your eyes).
Rival Visa touted traditional biometrics like face, fingerprint and voice for use with its own mobile wallet, Visa Checkout, for authentication on sales.
The gimmicks are great, but for mobile pay to really succeed, it needs to go beyond just payments, says Brendan Miller, an analyst with Forrester Research. He envisions offers like ordering ahead and skipping the line for pickup, or other incentives.
Miller’s vision of the future: “I walk into Starbucks and it recognizes me instantly from my voice. I order my latte and there’s no pulling out the credit card, because my voice is all the authentication Starbucks need. That’s where everything should be going.”