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Believe it or not, Apple Pay was not the only noteworthy mobile payments development in 2014.
Sure, this industry has spent the last three months dissecting Apple Pay and what it means for mobile payments going forward. But many “minor” developments had an impact on mobile commerce in 2014 and are sure to reverberate well into the New Year.
While it is almost impossible to rehash every notable piece of news Mobile Payments Today covered in 2014, there were a few items that standout due to their importance to the industry as well as a couple of developments that fell short of expectations and hype.
Below, you will find part one of our two-part 2014 review.
Apple Pay and CurrentC
It's easy to get caught up in the upcoming battle between Apple Pay and CurrentC because both systems dominated the news cycle at times during the last three months. But almost any conversation about mobile payments in 2014 will start, and sometimes end, with these two brands.
Apple Pay renewed buzz in mobile payments even though Apple used “old” technology to create its system. But the combination of NFC, tokenization, and Touch ID authentication (biometrics) helped Apple create what pundits and users deemed a simple payments experience at the physical point of sale with the new iPhone devices. Apple also worked out unprecedented agreements with the card networks and financial institutions to enable consumers to load their credit and debit cards into Apple Pay. Some observers believe Apple Pay as a payment method for in-app purchases was a more significant piece of news than the brick-and-mortar play. Nonetheless, the mainstream media and some industry pundits gobbled it all up and declared Apple Pay the clear future of proximity and remote mobile payments.
Meantime, the Merchant Customer Exchange lurked in the background with little mainstream media attention until two of its partners (CVS and Rite Aid) turned off contactless support at their stores soon after Apple Pay went live in October. The move affected not only Apple Pay, but also Google Wallet and Softcard. CVS was actually an initial Softcard partner when the mobile wallet first launched as Isis.
That move by CVS and Rite Aid started a debate about NFC vs. QR codes (MCX's preferred technology), interchange rates and loyalty. MCX immediately found itself in the middle of a public relations fiasco before it officially launched. And then things got worse when MCX revealed the email system it was using with its pilot CurrentC users was hacked. Later that day, CEO Dekkers Davidson participated in an odd 45-minute teleconference in which reporters could only as questions through an online chat box.
Davidson defended the MCX business model during the call, but over the subsequent weeks changed his tune about many aspects of CurrentC.
"[He] made the surprising statement that MCX was "agnostic about technology" opening up the possibility that MCX was open to other alternatives including Bluetooth low energy and NFC," Ed Busby, founder of Hudson Mobile Advisory, told Mobile Payments Today. "He even went so far as to say that it would be entirely possible that MCX could be used alongside Apple Pay.
"Perhaps more surprisingly, Davidson revealed that MCX was in talks with credit card companies, a major turnaround for the consortium, which was founded with the objective of reducing interchange by cutting out the payment networks."
We'll be talking about Apple Pay and CurrentC well into 2015.
U.K. efforts
Industry pundits believed Apple should've launched Apple Pay in a country with an embedded contactless infrastructure and an appetite for mobile payments. The U.K. certainly fits that description as multiple initiatives continue to emerge, the most significant of which was Transport for London's play to accept contactless payments for rides on all tube, rail and bus routes.
Consumers in the U.K. have multiple mobile payment options to choose from that do not require an NFC-enabled smartphone. Paym, Pingit and Zapp all rely on a consumer’s banking account to send and receive funds by using a mobile phone.
Paym users access the service through their participating financial institution's mobile-banking application. By the end 2014, 90 percent of all checking accounts (70 million) in the U.K. will be eligible to use the service. More than 1.6 million consumers have registered for the service as of Nov. 16.
Barclays launched Pingit in February 2012 as a person-to-person transfer service, but since has added features such as the ability for consumers to pay utility bills; a mobile checkout function to speed up purchases from a mobile Web or app checkout page; and the ability to make purchases by scanning QR codes. Consumers have downloaded the Pingit app more than 3.5 million times. Since Barclays released the system, consumers have used the service to make close to 775 million pounds ($1.2 billion or 976 million euros) in payments. To further spread mobile payments in the U.K., Barclays announced this year that it will provide 10 financial technology startups with access to its Pingit API along with seed funding.
Although Zapp is not yet live, it will be integrated into a participating financial institution's mobile app and is intended to provide real-time payments between consumers and merchants both online and at the point of sale without the need for digital wallets. The system will generate digital tokens that will hide customer bank account details from merchants and will work with different technologies such as NFC, Bluetooth, QR codes and PIN-entry point-of-sale terminals.
No word yet from Apple when exactly Apple Pay will expand overseas, but it has to the potential to be a hit with U.K. consumers as a recent survey found they are seeking more mobile purchasing options.
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