RFi Group Opinion - Payments, phones and wearables: An exciting year ahead
This month’s article discusses the year ahead in the world of payments with a focus on mobile payments and payments made via wearable devices. Is there consumer appetite for these payment forms? Will we reach a critical mass and when? Will there be a tipping point? With these questions to be answered in 2018, the year ahead certainly looks exciting.
Let’s reflect on where we are. The mobile payments landscape is cluttered. There is a massive array of domestic and global, proprietary and 3rd party mobile payment services. Apple Pay is now available in 25 countries and Android Pay is available in close to 20. Not much has been released from any of the participants on usage although, in Australia, ANZ (the only one of the big four banks to offer Apple Pay) has stated Apple Pay transactions made by its customers in December 2017 numbered 3.9 million up from 1.6 million in December 2016. Latest RFi data indicates that 12% of US consumers have used Apple Pay versus 6% in Australia and the UK and 5% in Canada.
WeChat Pay, used by 69% of Chinese consumers, is now available in 25 countries. The mobile payments dynamic that is playing out in China is fascinating, not least because of the actual and potential volumes involved. Some estimates suggest the value of mobile payments in the country tripled in 2017. WeChat Pay and AliPay continue to maintain a duopoly and they are now turning to public transport as the next opportunity to boost payments volumes. In January, it was announced that passengers on Shanghai’s subway system would soon be able to pay for fares with AliPay. WeChat Pay is already available on many public transport networks across China.
Outside of China, public transport has long been heralded as the user case that will push mobile payments towards the mainstream by supporting habitual usage. Progress is being made. An Apple Pay public transport trial is expected in Singapore in 2018. In New York, readers are to be installed at stations and on buses over the next two years that will support mobile payments services include Apple Pay, Android Pay and Samsung Pay. In London, Moscow, Chicago and a handful of other cities, it is already possible to use Apple Pay to pay for journeys on the local public transport network.
Payments via wearable devices are coming as a second wave following the emergence of mobile payments. Fitbit Pay and Garmin Pay are now supported by around 40 and 60 banks globally. In Australia, Bankwest, recently became the first Australian bank to offer a payments ring, launching ‘’Halo’’.
So, what is RFi’s opinion on the outlook for mobile and wearable payments over 2018 and beyond? After a slow start, mobile payments do seem to be gaining traction. This is not unusual. Contactless card usage took time to increase and in most markets, it was dependent on a tipping point being reached – major merchants starting to accept, public transport networks going open loop etc. – only beyond that point did usage really take hold. It does still seem like we are waiting for the unique CVP for mobile payments to be ‘’bought’’ by consumers, beyond the early adopters at least.
Wearable devices present a compelling case for an increase in consumer uptake even if usage in payments scenarios likely remain very low. If there is one critique that can be aimed at mobile payments it is that the user experience of tapping a phone against a payments terminal does not vastly improve upon the experience of doing so with a card particularly when there can be reliability issues to contend with.
The phone still needs to be found in a pocket, handbag etc. removed and tapped against the terminal. In contrast, in in-store environments, wearable devices offer a more seamless, fluid payments experience. In some markets, RFi’s research finds that more than 20% of consumers own a wearable health tracker such as a Fitbit. There is also a commonly held view that consumers are eager to incorporate their wearable devices into more aspects of their lives.
Ultimately, consumers will vote with their feet, or wrists or fingers choosing whatever payment form they deem to offer the greatest utility, convenience and reliability. 2018 might not give us all the answers we need to pick a winner, but a clearer picture of the road ahead should certainly emerge.