By ANGELO CACI
TRUSTECH – CANNES
From Internet towards Mobile and Convergence
From over 15 years, the development of Internet and Mobile-based services has generated new ways of doing business, especially towards consumers : boom of e-/m-commerce, digital banking, social networks, private sales, market places and sharing economy, crowd finance…
Meanwhile, the payments industry has been at the heart of a new paradigm due to the combination of several trends and forces :
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Disruptive technologies and digital channels
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New regulations (e.g. PSD2)
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Fierce competition due to many new entrants
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Changing consumers’ behaviors …
Proliferation of Multiple Payment Methods and New Entrants
For many years now, we have been observing the birth of new payment methods on internet and mobile which are better coping with specific requirements and contexts, e.g. : speed, convenience, security, size of the screen, payment in the move, e.g.
As a corollary of this effervescence, there is an increasing number of pretenders of all types (established companies, web giants, pure players, start-ups, payment or e-money institutions…)
Mobile Payments & Wallets : Who Will Win the Battle ?
Unsurprisingly, Mobile Payment is the subject of desire in all countries while E-Wallets have shown their relevance in e-/m-commerce.
This has now led to a true battle of titans between the web giants and wallet providers (Amazon, Ant Financial/Alibaba, Google, Facebook, Tencent, PayPal…), the international card schemes (Visa, MasterCard, Amex, Union Pay), the big retailers (Walmart, Starbucks…), the banks (Chase Pay, Paylib…), the smartphone manufacturers (Apple, Samsung, Huawei, LG…), the telecom operators (Vodafone, Orange, Telefonica, MTN…) and a myriad of start-ups…
Because of this frenzy, we believe that the mobile payment/wallet market will keep in being turbulent and we can only expect the cohabitation of many stakeholders and offers in the near future before we could hope a certain degree of consolidation.
One reason for this situation is the plethora of combinations for shaping a mobile payment/wallet offer in terms of :
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Technologies (NFC, Sim Centric, Embedded SE, Host Card Emulation/HCE; Sound Frequency; QR Code; SMS, USSD…)
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Contents and services : payment and additional services (loyalty, rewards, discount, cashback, transport…)
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Acceptance network (close, filtered, open loop) and channels (on-line, off-line, in-app)
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Covered geographies etc…
If today, the die are actually far from being cast when we consider the mobile payment/wallet market in most of the countries, nonetheless, some stakeholders have taken the lead when it comes to speeding the adoption, enriching the value-proposition and onboarding enough partners (e.g. cards schemes; banks; cards issuers; retailers and acceptance networks…) to turn the initiative into a lasting success.
The contenders
X-Pay and Web giants
In this category, we have the so-called X-Pay contenders which are mainly relying on NFC technology :
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Apple Pay : launched in the USA in September 2014, now live in over 30 countries with more than 130 million users worldwide.
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Samsung Pay : launched in South Korea in August 2015 and available in over 30 countries
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Google Pay : launched in the USA in September 2015, the service is open in about 20 countries
Apple Pay and Samsung Pay are currently leading the race and have announced that both have performed over 1 billion transactions since their launch.
In terms of giants with deep pockets, large footprints, significant growth and the biggest figures in terms of transactions, we obviously have to add WeChatPay (Tencent) and Alipay (Ant Financial/Alibaba).
WeChat has over 700 million active users and is striking deals with merchants (e.g. Starbucks), in China and beyond (Japan, Indonesia, Singapore, Thailand, South Africa, Europe) in order to further push its multi-facet payment features.
Alipay has also succeeded in turning its online payment wallet into a more universal payment instrument accepted at millions of physical outlets in China. Likewise, Alipay is “exporting” its model by multiplying acceptance agreements in developed countries, especially in Europe (e.g. with BNPParibas, Six, Wirecard, Worldline, Ingenico, Concardis…) or elsewhere (e.g. Verifone and FirstData, Cybersource and Stripe in the USA; Commonwealth Bank of Australia…) so that Chinese users who are travelling abroad can pay at stores with the mobile payment application.
Telecom operators
On top of these players, in certain geographies, Mobile Network Operators (MNOs) have been quite successful when launching m-payment services alone or together with partners (e.g. Orange Cash with Visa; Telefonica with MasterCard in Latin America…), without forgetting the breakthrough of MNOs in Africa (M-Pesa, Orange Money, Airtel, MTN…) or in other emerging or semi-developed countries (e.g. America Movil in LatAm).
Banks
As banks are amongst the largest cards issuers, they have naturally taken part in many initiatives. After having considered SIM-based solutions in partnership with local MNOs, a lot of banks are now looking at other options, in an independent way, via HCE-based solutions or through partnerships with one of the X-Pay providers.
In a few countries, banks have decided to form alliances with their peers (e.g. Paylib in France ; Bizum in Spain ; Digicash in Luxembourg ; Paydirekt in Germany ; Swish in Sweden).
Retailers
Among the players with a large audience, there are more and more retailers which have launched or could launch their own mobile payment service with the objective to satisfy their clients when they their spend in their networks, e.g. Starbucks (30% of the US revenues are now made with the mobile app), Walmart, CVS, Kohl in the USA; Coop in Denmark; Netto/Edeka in Germany; Tesco in the UK; Carrefour Pay and Decathlon Pay in France…
Other stakeholders
It’s the same objective that guides private label cards issuers or prepaid cards issuers (e.g. luncheon services providers Edenred and Sodexo) which are keen to put their cards into their own mobile payment application or into another one’s (with Apple Pay or Samsung Pay).
There are obviously many start-ups which have entered the arena across the globe, Lydia in France, Yoyo the UK, Paytm in India…
The Way to a Lasting Success
On of the key success factors is to delight the customer with added-value services beyond payment, e.g. couponing, loyalty features, instant reward, cash-back, geo-location, PFM, money transfer, personalized information and targeted marketing, easy check-in or check-out, pre-ordering and fast check-out for restaurants…
This is what many merchants tend to provide when launching their mobile based services and this is why they can be possibly successful.
Samsung Pay has also introduced a reward program while for the time being, Apple Pay relies on the loyalty features of their retail partners (e.g. Walgreens, Dunkin Donuts…).
Furthermore, generally speaking, we believe that a part of the success will depend on the maturity of payment methods in the related country. The more consumers are “stuck” with payment methods that “do the job”, the longer a portion of them won’t immediately jump on the bandwagon of mobile payments.
In a nutshell, all stakeholders we have mentioned above are engaged in a race against the clock in order to build the largest customers base together with the largest acceptance network worldwide and to regularly add new features and services, the ultimate goal being to establish their brand globally.