Use of mobile devices instead of cards to facilitate point-of-sale transaction is a goal that continues to challenge industry players seeking to make it happen. An upcoming TSYS white paper will examine the issues affecting mobile wallets and what the industry must do to address the challenges that thus far have limited broad use and acceptance of mobile-based payments.
Millions of consumers now are armed with mobile wallets, but their use of them is being held back, essentially because the wallets are no more convenient to use than credit and debit cards. Moreover, the payment-acceptance systems in use today are equally functioning well.
For the industry as a whole, these represent major factors that must be overcome if mobile payment is to emerge as viable a alternative, according to Chris Colson, director of innovation at TSYS.
In a recent podcast interview with MPD CEO Karen Webster, Colson provided a brief overview of a soon-to-be-released TSYS white paper on mobile wallets and his insights into where TSYS views the market is heading.
Besides the fact that today’s existing payment system functions adequately –fraud and breach issues aside – the types of mobile wallets available today are limited, and confusing, Colson said. (jump to: 0:50) “You know, one in five smartphone holders in the United States now have a mobile wallet installed; that’s about 29 million consumers,” he said. “But this only accounts for about 1.2 percent of all the credit card purchases, which total $1.6 trillion.”
Ironically, what TSYS found in its research is that consumers don’t just want payment capabilities, they also want the ability to replace the actual, physical wallet, essentially moving the wallet from the back pocket to the front pocket, Colson said.
Colson also cited various expectations in the industry. Consumer confidence, he said, continues to grow, but this is an area require constantly work to improve the security of the mobile wallet and the device itself.
And you’re starting to see this with the latest smartphone releases, he said. For example, the iPhone 5S now has the built-in fingerprint biometric, which is used for phone and Apple Store access. (jump to: 2:30) “Higher risk will demand higher security solutions and measures,” Colson said.
Greater dependency on the mobile phone itself also is an important trend. (jump to: 2:46) “Convenience is the commodity that everyone wants to leverage and this is driving the greater dependency and usage of their mobile phone, Colson said.
Mobile communication also is changing the way that organizations and businesses do business. For example, showrooming, something that was once feared, is now embraced, Colson said.
Increasing competition among mobile-wallet players also is increasing, as well as what consumers can do with their phones. A good example of this is TSYS’s recent announcement of authorization controls, which allow the consumer to turn their credit and debit cards on and off for added security, Colson said.
Phone technology also is improving, and it could have an impact on the way consumers shop. (jump to: 3:25) “The dark horse of all this will be BLE, or Bluetooth Low Energy. This, we believe, will be a true disruptor,” Colson said. “It has intense features that could make it a disruptor with the mobile wallet overall.”
To learn more Colson’s views of the mobile-payments landscape, listen to the full podcast by clicking below.
*If you have trouble with the audio player above, click here.
Chris Colson, Director of Innovation, TSYS
Chris Colson is director of innovation for TSYS. He is an 18-year veteran of the payments and financial services industry, having previously served as vice president, product management, of Equifax, in Alpharetta, Georgia, where he was responsible for managing multiple business units and product portfolio teams. Colson’s additional responsibilities at Equifax included defining product and market strategies; identifying, developing and working with segment partners to create joint products; and defining and describing innovative ideas. Prior to TSYS and Equifax, he gained additional experience working at companies such as S1 Corporation, Magnet Corporation, Bank One and Bank of America.
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