Watching the mobile payments market is enough to make you dizzy. One day it’s all the rage, then the hype dies down as we learn that mobile payments represented only 4% of transactions in 2015. Now the user behavior of millennials is projected to cause a huge spike in mobile payment transactions in 2016 and beyond. So what gives?
The latest mobile payments forecast from eMarketer indicates that the total value of mobile payment transactions in the US will grow 210% in 2016. They claim that as more merchants adopt point-of-sale systems that can accept mobile payments and incentives like promotions, and as loyalty programs become more integrated the market will adjust. This also backs up the 2015 Mitek and Zogby Analytics poll that revealed about 86% of millennials made purchases or conducted transactions from their smartphones.
These forecasts and others haven’t gone unnoticed by the big box stores. Enter the newest player to the game, Walmart Pay. What’s different about this latest attempt to grow the mobile payments market?
Walmart is taking a different approach. According to CUInsight, they are using Quick Reference (QR) technology rather than near-field communication (NFC) that Apple Pay and Google Wallet use. Walmart will be adding this payment technology into their current mobile app (with a reported 22 million active users), allowing customers to shop with the app and now pay with it as well. Of course Walmart mobile app users pale in comparison to Apple's 800 million iTunes users.
Walmart is the first major retailer to launch its own payment service, which means we all should be watching to see if mobile payment usage becomes more widespread through a direct retail channel. As mobile payments technology improves and consumers start to embrace paying via their smartphones, maybe mobile wallets will begin to thicken up.
Ironically, the most interesting mobile wallet technology is owned by Samsung and is used within their Samsung Pay. While Walmart is betting on QR technology and Apple and Google use NFC, Samsung implemented MST (Magnetic Secure Transmission), which uses a tiny coil that shoots out the same magnetic code that the point-of-sale readers normally get from your debit or credit card. This means Samsung Pay allows you to pay at most any terminal where you can swipe a credit card. There are a few places where the MST technology won't work, namely any card reader that requires a physical trigger to activate the card read. That means that ATMs and gas pumps won't really work with Samsung Pay, but most stores will. Even though it's transmitting via a magnet, Samsung Pay is using the same security we have learned about with Apple and Google Pay, namely tokenization. If you or your members own a Galaxy S6, S6 Edge, S6 Edge+, Note 5 or higher you can use Samsung Pay today. Try it, even when the retail clerk says 'we're not that advanced' and suggests it will not work, it will...
Mobile payments and mobile wallets are certainly topics that shouldn’t be overlooked by credit unions. With a new generation relying on their smartphones for just about everything, your members are now in the driver's seat in directing where technology will head.