3rd June 2015
It was only a matter of time before Google followed the lead of Apple and Samsung to introduce contactless payments to mobile devices. Although all of this competition ought to be good for consumers, all it seems to be doing at the moment is leading to added confusion. Meanwhile behind the scenes, card issuers are desperately trying to figure out how they make any money out of these services. What all these mobile payment solutions are offering is very similar – you can download a replica of your credit and debit cards to your phone and then use it to pay at a merchant by tapping the device on a contactless reader. The payment transaction then runs down the rails of the existing payment networks.
But from a consumer perspective putting my card on a phone isn’t a huge step forward – the added convenience of being able to pay with a phone rather than a card is minimal and the disadvantages associated with losing my phone increase significantly if I can’t pay for anything or travel home because my battery has run down. And issuers have the added expense of issuing virtual cards onto phones, as well as the original plastic versions, and they have to make system modifications and/or pay payment networks in order to be able to perform transactions. Issuers aren’t doing any of this out of a great sense of optimism, they’re doing it because everyone else is and they can’t afford to be left out.
What makes Android Pay slightly more interesting is that it does at least try to address these issues instead of ignoring them. Here at Proxama it’s been clear for some time that in addition to delivering the ability to make a mobile payment its essential to enhance the rewards and integrate the consumer experience properly: payment is the last step in a journey, and ignoring how you get there runs the risk of losing most of your passengers along the way. So we’ve been developing rewards and engagement mechanisms that ensure that consumers can see a clear benefit to using a mobile for payment. This appears to be one angle that Android Pay is directly addressing.
Google also supports issuers by enabling them to use their own mobile banking application and call out to the Android Pay wallet. This, at least, allows issuers to maintain their own identity and offer their own services behind the payment cards. Allowing issuers to manage their own brands enables them to promote some level of stickiness for their cards in what is likely to be a highly dynamic environment is essential.
It is, of course, too early to say how this will end: the introduction of Apple Pay and HCE radically altered the balance of power between the Mobile Network Operators and the handset manufacturers, much to the surprise of most of the industry experts. But our view remains simple – consumers will not choose their mobile device based on whether or not their bank supports that technology; but in future they may swap banks because they want to pay with their phones. So issuers have no choice – they need to support all of the major mobile payment technologies.
Here at Proxama our solutions in digital marketing, mobile issuing, tokenization, EMV transaction processing and HCE are specifically designed to be scheme neutral, to provide issuers with a low-cost platform for all of their current and future mobile payments requirements. To make that a reality, the new style payment schemes – Apple, Samsung, Google and whoever is next– need to open up their wallet interfaces to the rest of the world, and issuers must be given the right to perform their own tokenization. These relatively simple changes will improve the economics of mobile issuance for issuers, and will allow the various new-style payment schemes to compete in the area they should – in providing a rich, featured m-commerce environment for consumers.
For more information about Proxama’s digital payments and marketing platform please contact firstname.lastname@example.org
Rob Macmillan, VP of Marketing, Digital Payments Division, Proxama