Digital Transactions Authoritative, insightful and timely information for payments professionals
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In mobile payments since early 2011, everything has changed and nothing has changed. That in a nutshell is the conclusion of a paper released this week by the Federal Reserve Banks of Boston and Atlanta, which sponsor an industry group that meets three times a year to hash out issues in mobile payments.
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Mobile payments remains a fragmented business with established financial-services players battling it out with startups and telecommunications giants. And progress for near-field communication (NFC), a snazzy, two-way contactless technology that once promised to revolutionize mobile payments, is still coming with painful slowness, according to the paper.
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“NFC mobile payments have not evolved as quick as originally predicted,” says the report, which covers the 24 months from the start of 2011 until the end of last year. Partly as a result, “NFC is no longer viewed by industry stakeholders as the exclusive technology that will drive mobile-payment adoption,” say the authors, who include three representatives from the Boston Fed and one from NACHA, the regulatory body for the automated clearing house network.
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While NFC is still seen as a powerful technology for mobile point-of-sale transactions, other, less expensive triggering mechanisms have rapidly emerged over the past two years, including quick-response (QR) codes. Also, while NFC depends on payment credentials stored in secure chips inside mobile devices, these credentials have begun migrating to central servers in so-called cloud-based configurations. The most recent example of this shift came last year when Google Inc. dropped phone-based credentials in favor of a cloud alternative for its 2-year-old Google Wallet.
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The emergence of Google, along with the NFC-based Isis venture launched by the country’s largest mobile carriers, also stand as dramatic changes in the market over the past two years, the report says, These new ventures have also increased the fragmentation of the nascent industry, adding more choice in business models and technology for merchants and consumers but also adding to uncertainty about the industry’s near-term direction.
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The Boston and Atlanta Fed convened the first meeting of the Mobile Payments Workgroup (MPIW) early in 2010 in an effort to bridge the yawning chasms separating banks, telecom companies, and merchants. Since then, membership in the group has grown from 22 to 42 companies. Indeed, some participants say they value the group’s meetings as the only ones where all mobile players can get together to work out issues hindering progress in mobile payments.
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The paper, entitled “U.S. Mobile Payments Landscape—Two Years Later,” is the first one issued about the working group’s efforts since March 2011.
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In related news, Apple Inc. retained its lead among smart-phone makers in terms of number of users in the latest market-share figures released by Reston, Va.-based researcher comScore Inc. Apple’s share of subscribers was 39% in March, up 2.7 percentage points from December and well ahead of No. 2 maker Samsung (21.7%).
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The story is different, however, when it comes to operating system. Here, Google Inc.’s Android software (52%) maintains a comfortable lead in users over Apple’s iOS (39%) as of March.
