Last week UK Bank, Halifax, released an interesting report. The headline statistic is that cash makes up just £18.33 of every £100 spent (18%), with digital transactions soaring over the last few years. Smartphone usage has powered the change, and mobile transactions are expected to grow from £9.7bn this year to £53.6bn by 2024.
With the launch of Apple Pay and Samsung Pay, plus giant steps forward in direct operator billing and a host of other mobile money technologies and business models, can the industry finally trumpet the beginning of the end of cash? We asked MEF members and the wider mobile community for their thoughts on how and if this shake-out will happen. Here’s what they said.
There are also more statistics as well as insights, news and graphics including Mobile Money Landscape available as part of MEF’s (just published) quarterly Mobile Money Bulletin. Download it here for free.
Michael Dooijes
CEO
MyOrder
Michael Dooijes, CEO – MyOrder
We expect a further decrease of cash payments. Eventually smartphones won’t only replace cash, but also plastic. But mobile payment goes beyond NFC technology.
We believe mostly in using your smartphone for value added services such as mobile ordering and mobile loyalty. Not only paying contactless for your groceries, but also using mobile coupons and gaining loyalty points. A complete mobile ecosystem with all your purchases integrated in a single app. Your smartphone not only replaces your bank account, but becomes a sort of swiss army knife for communication and purchase with access to a mobile hub of value anytime, anywhere. Simultaneously, the retailer gains more insights in his clients preferences, which allows him to personalize the relationship with his customer. Customer interaction becomes less general.
A lot of retailers now still have their own app, which results in multiple separate stores on your smartphone. We see a future where you only use one app in which multiple retailers are represented, working across verticals.
Gianluca Dagostino
CEO
Neomobile
Gianluca Dagostino, CEO, Neomobile
As the world economy goes digital, mobile money stands out as one of the fastest growing trends. I believe that the next big thing in the mobile payments market will be Direct Carrier Billing as a means to monetize the mobile internet, especially the App and Mobile Web App ecosystem.
Direct Carrier billing is a rapidly growing market: the number of carrier billing connections is increasing and so are global revenues. More importantly, the share of in app payments and mobile digital goods purchased via carrier billing is growing.
The demand for connectivity and smartphones is at the same time the demand for quality content and services, and in 2015 we foresee the rise of new content verticals, such as Mobile Health & Fitness and Mobile Video. This can also be a “renaissance” for Operators, allowing them to become more agile with new services, such as the cloud, media and finance.
Ian Clowes
CEO
PCT
Ian Clowes, CEO – Payment Card Technologies
Young adults are the most likely group to use varying methods of mobile payment, yet cash remains the most frequently used method of choice for small purchases. These purchases are dictated by convenience, whilst security and getting the best deal influence large payments. Although many can see the cashless society on the horizon, not all are totally comfortable with it. However, payment options will always be a marginal factor but they can influence some consumer decisions and key brands such as PayPal, ApplePay who are seen as influencers in the market.
When looking at the barriers to the universal adoption of mobile money, older consumers have to date shunned the process, perhaps because cash is viewed as the most secure option. However, resistance to innovation can be overcome, especially when there is clarity around what needs to take place to improve the overall infrastructure.
The trend towards a cashless society is set to continue and accelerate over the next five years in line with the rapid growth in contactless payment transactions at point of sale whether via card , mobile or the new emerging wearables (ie watch) market.
Jodi Wadhwa
VP Marketing
Arxan
Jodi Wadhwa, VP Marketing – Arxan Technologies
If mobile money, and the associated mobile platforms, are to be truly successful then consumers cannot be limited to closed ecosystems. There needs to be openness that supports interoperability among the payment and technology providers to best serve the diverse device and platform choice of consumers. The software-based strategy, recently adopted by Android, which provides an open API for developers, is the approach that best supports broad adoption by consumers, retailers, payment providers and banks.
As all parties compete to get a slice of the market, there is the risk that security falls by the wayside in favour of aggressive time-to-market deadlines. The application security challenge that needs to be confronted head-on is in ensuring that the application code, payment tokens, or the cryptographic keys are properly secured, which is not a trivial matter. To achieve a secure software solution that is not reliant on firmware version constraints, mobile payment app developers should implement secure crypto and ‘application hardening’ techniques. These application protections can be applied at the end of the software development cycle to protect the payment application and yield self-aware, self-defending and tamper-resistant applications. Only then can the risks, such as hacking, tampering, malware insertion, reverse engineering, fraud, loss of data be mitigated.
There is no doubt that mobile money and payments will continue to grow in popularity and, with personal data and payment details up for grabs by hackers they are an increasingly lucrative target. Application protection innovation must be kept in-step with the innovation in mobile wallets and payments services.
Raja Ray
Director of Products and Solutions
Verifone
Raja Ray, Director of Products and Solutions – Verifone
Monetising applications by integrating them with vouchers, coupons or loyalty will enable mobile payments and digital wallets to play a more central role in the consumer journey. Some companies have already developed a strong proposition in this space, with service-level benefits offered in hospitality and transportation environments that allow customers to pay without cash.
The impending arrival in Europe of more mobile wallet based initiatives, such as Apple Pay, will no doubt serve as a catalyst for more cashless payments and the evolution of technologies such as HCE and tokenisation, will play a crucial role by making it easier for companies to develop apps that take advantage of mobile payments and ease out security concerns around the technology.
Paul Paterson
Commercial Director
ImpulsePay
Paul Paterson, Commercial Director – ImpulsePay
Technology is no longer the main barrier to the adoption of mobile money, consumer acceptance is.
The mobile payments ecosystem is very fragmented with competing models and technologies, but choice is a good thing. Competing models are necessary in that they allow the market to better understand consumer behaviour and their acceptance of new technologies. Many of these technologies, third party mobile wallets in particular, will probably die off in time.
The successful ones will be those that can achieve widespread consumer engagement and adoption, and so far this is only really been achievable by cooperation between the existing mobile technology providers (Mobile networks and handset manufacturers) and the banks.
Too many mobile money solutions struggle to achieve consumer acceptance because the set up process to too complicated or confusing, it needs to be as integrated and seamless as possible. The banks have understood this, having gradually rolled out card and mobile-based NFC solutions that are simple to use.
A positive example of seamless mobile payments is direct operator billing. Right now anyone in the UK with a mobile phone can use direct operator billing without pre-registering – that means 93 per cent of all UK adults. This, coupled with the frictionless two-click payment process, makes it one of the most powerful mobile money solutions available.
Is the future cashless? It depends on the timescale. We’re going to be using cash at least a little bit for the foreseeable future, but the prevalence of simple digital payment mechanisms like contactless payments and app payments is likely to eventually replace cash entirely, in the UK at least.
Jon Banks
Director of Product Management
The Logic Group
Jon Banks, Director of Product Management – The Logic Group
The move away from cash makes perfect sense; with cards and mobile payments we can now pay exact change for what we need. A coffee for £2 or a food shop that comes in at £17.84 are equally simple to pay for. Cash will always have a place but will become increasingly marginalised as quicker and easier payment methods gain mainstream attention.
There will never be one universal payment method, but there will be dominant ones, with consumers gravitating towards the options that best meet their specific needs. In the future, mobile payments solutions will be dominant. The boom in contactless card payments over the last year has helped consumers grow accustomed to the ‘tap and pay’ mentality, and we’ll see them gradually migrate to mobile as solutions become readily available.
This, however, hinges on proving the security of mobile transactions. Our research shows over half the population put security above all else when using a new payment technology. It’s important payment providers remember that when it comes to their wallets – mobile or otherwise – consumers need to be reassured that their money is secure. Fortunately, the technology to secure payments made via mobile device is already in place and based on the same tech that secures card payments today.
Barriers to adoption are coming down every day: vendors like Apple and Samsung are including the technology in their devices and retailers are already accepting mobile payments. 2015 may not be the year of mobile money but it is already laying the groundwork.
Monetising applications by integrating them with vouchers, coupons or loyalty will enable mobile payments and digital wallets to play a more central role in the consumer journey. Some companies have already developed a strong proposition in this space, with service-level benefits offered in hospitality and transportation environments that allow customers to pay without cash.
Paul Sylling
CMO & VP of User Experience
CoinZone
Paul Sylling, CMO & VP of User Experience – CoinZone
The predications about the end of cash have been going on for quite a while and every new innovation in payments tends to reignite the conversation. I think what is more interesting to focus on is not the end of cash but instead a new era of frictionless spending. Consumers now expect a more convenient user experience that is faster and easier. Changes in consumer behavior as well as the advancements in mobile technology will force banks and retailers to respond. Small businesses that are cash only will need to adapt to evolving payment systems or miss out as their customer goes elsewhere.
What’s exciting for me is the growth of Bitcoin, which matches perfectly with the growth of mobile adoption, new consumer expectations as well as the need for improved privacy and security. Millennials are increasingly finding traditional banking solutions irrelevant and instead looking for new technologies to fill the gap. Bitcoin is appealing because you can instantly send money around the world as quickly and easily as sending a text message without any transaction fees.
Dan Salmons
Managing Director
PayPoint Mobile & Online
Dan Salmons, Managing Director – PayPoint Mobile and Online
Not every payment option is right for everyone or every product. Indeed, there have been plenty of experiments in mobile payments that have failed. Why? Because they basically set out to take something pre-existing for which payments via cash or cards worked perfectly well, and simply tacked a mobile dimension on to the end. Granted, a lot of the enabling technology was very clever but the proposition for the mobile consumer, in a lot of these cases, was not compelling enough. Mobile payments are getting simpler but, in most cases, they still have a job to do to displace cards and cash.
As handset manufacturers begin launching mobile devices with payment functionality hard-wired into them, businesses have a golden opportunity to develop all kinds of new commerce offerings. In order to be a hit with consumers they will need to offer things that only a mobile device can offer: location specificity, personalisation, the mobile screen real estate, smartphones’ SMS messaging and voice calling capabilities. And it is in these areas where mobile payments have a significant edge over ‘dumb’ cash and card payments. It is here where businesses can really add value to consumers, in a way they can’t with cash and cards.
And, as long as cash and cards remain the favourite means of payment, businesses looking at opening up the mobile channel have to be sure that they are giving consumers clear reasons for purchasing via their phones. After all, if all the phone does is make a payment, it’s no more use than a fat credit card.
Dan Wagner
Founder and CEO
Powa Technologies
Dan Wagner, Founder and CEO – Powa Technologies
Halifax’s revelation that just 18 per cent of all transactions use cash today demonstrates how quickly consumers are adapting their habits to match rapidly developing technology such as mobile transactions. Withdrawing and carrying cash is becoming increasingly less appealing as digital options advance, and the figures also display a broader change in consumer behaviour.
Smartphones have become a dominant force in almost every aspect of our lives, especially when it comes to commercial transactions. The latest figures reflect modern consumers who browse and transact on their own terms, whether at home, in-store or on the move, using their smartphone as the tool of choice. Retailers are under increasingly high pressure to respond to rapidly changing consumer behaviour driven by mobile technology.
There are also more statistics as well as insights, news and graphics including Mobile Money Landscape available as part of MEF’s (just published) quarterly Mobile Money Bulletin. Download it here for free.
