Wearable technology expected to push mobile payment solutions

Werable Mobile PaymentMobile wallet solutions have been holding their own against emerging alternative payment solutions, thanks to the interest evinced by industry giants such as Amazon, Apple and Google. The entire mobile industry (smartphone manufacturers, telecommunication companies and chip makers), coupled with the finance ecosystem (banks, financial institutions, payment processors and platform providers), are acknowledging the solutions’ potential by investing heavily in them.

According to Frost & Sullivan’s new analysis, Mobile Wallets—Amazon, Apple, and Google Seek the Winning Strategy  the number of active users will rise from 409 million in 2015 to 1,722 million in 2023. Furthermore, mobile payment transaction value will increase from €289.02 billion in 2014 to €1,516.70 billion in 2020 at a compound annual growth rate of 31.8 percent. By 2020, Asia-Pacific will account for the highest proportion of total mobile payment transaction value at 29.2 percent, followed by Europe at 23.1 percent.

“The mobile wallet active user count is expected to surge in 2017 and 2018 due to the availability of mobile payment- and mobile wallet-enabled smartphones,” explained Frost & Sullivan Digital Transformation Global Program Director Jean-Noël Georges. “Due to security concerns, some customers will opt for cloud-based solutions with the support of tokenization.”

Interestingly, banks and financial institutions are not likely to be swayed by the proliferation of smartphones, due to the high initial costs of setting up the infrastructure. Instead of being deployed as a simple payment application, it is likely that mobile wallets will be the central application for additional services such as loyalty program management or coupons.

Apple’s solution for this market is the Apple Pay, an easy-to-use, consumer-centric solution supported by a powerful marketing machine. To use Apple Pay, credit card information must be entered only once and payments are authorized with the fingerprint sensor available on the latest iPhone models. In the interest of security, the service is only available for banks and card companies that have partnered with Apple.

In response to the introduction of Apple Pay in October 2014, Google announced the launch of Android Pay in May 2015. This new platform facilitates payment integration for developers, retailers (with in-store purchases) and third parties (banks or financial institutions) with their own applications.

Unlike Google that made a comeback after the failure of the Google Wallet and Apple, which entered the market with its strong Apple Pay product, Amazon is yet to prove itself. The Beta version of Amazon’s Wallet was launched in July 2014 but was withdrawn from the market due to low adoption rates and it never made it past this stage.

Nevertheless, other companies have entered the competition. PayPal, previously eBay’s payment arm, is probably the most serious challenger to the established mobile wallet players. Microsoft too is a notable competitor, entering the fray with the latest version of its operating system, Windows 10. This version has a ‘tap to pay’ service that supports host card emulation.

“Furthermore, the rise of wearable technology for payment purposes will have a part to play in the development of innovative and disruptive mobile payment solutions,” noted Georges. “For now, most of the players in the payment value chain are just trying to be present in the mobile payment ecosystem as well.”

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Categories: Mobile Wallet, Wearable Computing

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  1. Wearable technology expected to push mobile payment solutions | Kenneth Carnesi - March 4, 2016

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