Mobile phone payment predictions for the future

Cash is no longer king in a the digital world, with a raft of new payment methods being adopted around the globe.

This includes the advent of mobile phone platforms, or digital wallets, where customers can pay online or in-store using just their phone.

Is this a gimmick? Or a real threat to traditional payment methods?

How mobile phone payments will gain traction

Presently, the use of mobile phones for payments in Australia is isolated. The Reserve Bank of Australia reported that just one per cent of all payments made in November last year were completed using mobile phones.

The use of credit and debit cards, the traditional way, slipped to 53 per cent as more than a third of the nation elected to ‘tap and go’ using contactless cards.

These chipped cards are issued free by the banks, so consumers see little value in switching to a mobile platform.

The way customers are attracted to mobile payments is through innovation and value add-ons, like international adaptability, loyalty points, identification benefits and peer-to-peer payment options.

And while one per cent may not seem significant, mobile proximity payments tripled from 2013 to 2015, with $10 billion spent globally. This is predicted to soar to $92 billion by 2019.

The current players

Most banks have their own mobile payment platforms, but they are being well beaten by Apple in Australia because of the way iPhones are built.

Apple Pay and Samsung Pay are the two new players on the landscape, and anyone with an iPhone is pretty much restricted to using Apple Pay for the time being.

This is because the near-field communication controller in Apple products is tightly locked down. The banks are trying to negotiate terms on being able to access the NFC, and even threatened a boycott until the ACCC halted the collective bargaining move by the banks to gain access.

One bank has crossed the picket line, so to speak, with Westpac’s Chief Executive Consumer Bank George Frazis confirming they had negotiated a deal with Samsung Pay.

“On many devices, our customers can now use either Westpac Tap and Pay, Android Pay or Samsung Pay to make contactless payments, and we’re delighted to be the first Australian-owned bank to offer this choice,” he said.

How the Internet of Things will progress mobile payments

Samsung Pay is the most obvious payment platform that is likely to be embedded in IoT devices in the future, with the Korean manufacturer already well established as sellers of electronics and white goods.

This could mean we see connected fridges capable of self-ordering replacement products and a new way to shop for television users.

Samsung Australia head of mobile payments Mark Hodgson said research was already well underway.

“We are well set for our future IoT strategy, but it is early days. Exactly what it looks like on TV screens is work being looked at now, but we will need a payments system to connect all the dots,” he said.

The future of mobile payments

The one certainty consumers can expect, according to the Australian Payments Network, is the continued decline of cash and cheques as payment options.

“The question remains whether this decline is terminal or will plateau at a particular level,” the Network said.

Mobile payment options are expected to evolve, possibly to the point where a point of sale is no longer required and customers can shop on the floor with the phone, paying as they go and having delivery arranged dynamically.

“And that is where you are going to see mobile payments changing the nature of how customers shop in retail stores,” New Zealand-based mobile POS technology company Vend founder Vaughan Rowsell said.

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