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Mobile Payments are Ready and Primed to Explode in 2015

We’ve long heard that the year of mobile payments has arrived. 2015 began in much the same way. This year however is markedly different as Apple’s latest company earnings validated claims that 2015 is the year for mobile payments. Tim Cook in fact heralded 2015 to be the year of Apple Pay, but the company’s success is one that can be celebrated across the mobile payments industry.

This is not the first time Apple has validated a market segment causing it to subsequently explode; think portable computing, music players as well as smartphones and tablets. As Apple readies itself for a global launch of Apple Pay as well as the Apple Watch, the next 12 months will certainly accelerate this market, as reaffirmed by Deloitte’s recent predictions that the use of mobile phones for making in-store payments is set to grow by 1000% during 2015.

With so many factors in its favour, 2015 will be the year for mobile contactless payments but to ensure widespread consumer adoption, three things need to be considered:

Shoppers need more opportunities to use it: While Apple Pay is certainly paving the way for the “tap to pay” trend, the opportunity for shoppers to use this technology is not yet as widely available as it could be. This will no doubt change as we see more merchants sign up to payment schemes such as Apple Pay and Google Wallet. As mobile payments fast become available to a wider set of the population across the globe, merchants will start to have a vested interest in meeting this demand and will invest in the infrastructure to enable these payments.

Remove the key roadblock by addressing security: Trust is essential for any disruptive technology to be widely adopted. By introducing Host Card Emulation (HCE) to the payments mix, the industry has made a significant leap forward in making mobile payments accessible, although questions still need answering around its inherent security of customer payment credentials and building the necessary trust. Thankfully this is starting to happen and viable security solutions are emerging for HCE. What is also interesting is that smartphones themselves can assist further in the security of mobile transactions via tokenization and by using features such as proximity Wi-Fi locations, GPS and 3G location to authenticate the shopper. The more progress made here, particularly with the encryption of data, the further it will drive mobile payment adoption this year.

Shoppers need more reasons to pay in-store: Mobile payments aren’t just about the point of purchase. It needs to be considered as part of the overall consumer journey. Forrester Research suggests that having access to loyalty programme points and rewards within a mobile wallet is the number one feature consumers are interested in. We’re already seeing some success in Norwich where 20 merchants are using proximity marketing technologies, such as Bluetooth Low Energy beacons, as a means to trigger location-based offers. If a shopper has signed up to the scheme and they are walking past a participating cinema for example, beacons can detect this and send a 2-4-1 voucher direct to their phone for the next showing of the latest blockbuster. We expect to see more innovation like this, with merchants adopting digital loyalty schemes and combining these payments strategies, to encourage purchases in-store.

Game changers such as Apple Pay and HCE have brought scheme based mobile payments to the forefront as they become available to more people. This has made it easier for issuers to implement mobile payments thereby driving adoption. But to really speed up growth, all of the above needs to be considered in order to see even more consumers reaching for their smart device rather than their wallet to complete their in-store purchase.

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