On the customer side, there is no global standard for payment systems, which makes using a mobile wallet difficult when traveling out of the country.
This could result in having to install and set up multiple mobile wallets, based on where you are traveling — and then removing all the data before you delete the wallets once you get home. Each one may be an ideal choice for certain clientele, but they all have their issues, as well. But what if most of your customers prefer code-based or cloud-based systems?
The obvious answer would be to find out which system your customers prefer before you invest in any one system, but the hope is that someday POS terminals will be able to accept all forms of payment. Finally, there is the simplest of reasons — old habits die hard. We are so used to the holy trinity of payment types — cash, check and charge. Another recent study from research firm Phoenix Marketing International found that 32 percent of U. Among those respondents, 67 percent were millennials and 50 percent were Gen-Xers.
And Forrester estimates that U. While the future of mobile payments may be bright, many challenges must still be overcome, including the follow seven significant hurdles.
The proximity mobile payment process is still not the seamless, "frictionless" experience it needs to become to gain widespread adoption, according to Forrester's Miller. For example, when consumers use debit cards via Apple Pay to make purchases, they must take out their smartphones, use a thumbprint to unlock the phone and mobile wallet, select the card to use if multiple cards are available , and hold their devices close to payment terminals.
After transactions are made, consumers must usually still enter their PIN or provide a signature. In other words, the mobile payment experience isn't that much better than using an actual credit or debit card, Miller says. Most mobile payment services and wallets don't offer enough added value to entice hesitant consumers. For example, mobile payment users typically can't redeem loyalty points or special offers at the PoS when making a purchases.
However, some branded mobile apps with payment features have successfully tied together loyalty programs and point redemption, according Miller. Starbucks's mobile app, for example, effectively combines the coffee chain's loyalty program with mobile payments, he says, but few such success stories exist. They need to provide value outside of consumer-retailer transactions.
Mobile payments haven't become mainstream, because the infrastructure required to enable them is still evolving, according to Miller. For example, U. The competition for payment processing services, especially mobile payments, is heating up. Last week Google kicked it up a notch by announcing that it's phasing out Google Checkout in favor of the new Google Wallet.
This service supports in-store tap-to-pay payments from your phone via near field communications technology, as well as purchases on the web. If you log in to your Google Checkout account now, you'll be notified that you've been switched over to Google Wallet. Any credit cards or other payment information you've saved in Google Checkout will be available in Google Wallet. The catch: Google Wallet isn't yet widely used for in-store purchases.
So this holiday shopping season, it's unlikely that many people will be waving their phones around to buy holiday gifts. Most smartphones coming out now — other than Apple products — are being enabled with NFC, or near field communication, a wireless technology that allows the devices to make payments just by touching them to a sensor.
In Canada, half the mobile phones in use are smartphones, and 10 per cent are NFC-enabled, Deloitte says. By , it expects that figure will have risen to 70 per cent. Ten per cent of merchant terminals are currently enabled for contactless transactions with smartphones, a number Deloitte expects to double by , but with high penetration in target markets such as fast-food restaurants and gas stations.
Earlier this year, the Canadian Bankers Assocation revealed its blueprint for how financial companies and large telecoms could work together to turn smartphones into mobile payment terminals using NFC or "tap-and-go" technology. That leaves the phone companies in the position of deciding to what extent they might agree to those standards and roll them out.
Derek Colfer, Visa Canada's business leader for global mobile product innovation, says it's a bit too early to call what companies are developing e-wallets or mobile wallets. Doing that "infers everything in your physical wallet will also exist within that secure application on your mobile device," he says. Ann-Marie McIntosh, head of strategic solutions and partnerships for Visa Canada, says the company likens its effort, V.
That digital container space would house information, including what is currently on credit cards not just Visa , and work when a consumer makes a payment from any digital platform, whether it's from a computer while sitting at home, from a tablet while waiting for flight at the airport or a smartphone while buying gas or a hamburger.
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