The London PR Newswire reported yesterday that mobile payments are on the rise. Despite Apple Pay expanding from the US to the UK there is a hesitation among consumers to embrace the use of mobile transactions.
Here in the US, The Huffington Post reported on Monday that holiday shopping is slow in use of mobile payments from smart phones although the Millennials are the primary user compared to other age groups.
The outlook for 2016 is that 5 percent of the 600-650 million NFC-phones will be used at least once a month to make contactless payments. Awareness is growing that use of mobile phone payment provides a unique code to the merchant and the credit card number does not appear in the transaction.
I had an opportunity to speak with Jason Oxman, CEO of Electronic Transactions, about purchasing preferences and the changes in the mobile payment system in 2015 with an eye to the future in 2016.
Q. Only 28 percent of smartphone users rely on mobile payments with the Millennials most comfortable making transactions than other generations. What is the outlook for 2016?
J. O. We’re expecting that mobile payments will grow exponentially in 2016. The arrival of Apple Pay, Android Pay, Samsung Pay and Current-C has propelled mobile payments into the mainstream. It only makes sense: it’s easy for people to pay using a device that’s within reach day or night.
According to eMarketer, 2016 will be an inflection point for mobile payments in the US, with transaction value tripling to $27.05 billion and proximity payments surpassing mobile e-commerce. Value will more than double in 2017 and grows in excess of 80 percent through the rest of the forecast period.
Android and Apple Pay have introduced the cashless transaction but are still in infancy stages and concern for security risk is a major consideration. How will biometric and fingerprint recognition affect the future for these cashless systems?
Most mobile wallets on the market today are packed with a whole suite of security solutions which, layered together, make your smartphone nearly impenetrable to fraud or theft. Mobile payments services transmit a one-time use token in place of payment account information, meaning that account numbers cannot be intercepted and used by thieves.
Companies are deploying cutting-edge fingerprinting, facial recognition, and a host of other technologies to make sure that no one but the owner of the phone can get into the financial account. Facial recognition scans perform “liveliness checks” to make sure an impostor isn’t simply holding a photo of the owner’s face in front of the camera. The digital algorithm stored on the device cannot be matched by anything but the owner’s fingerprint. In short, the payments security world is working very hard to stay one step ahead of criminals and hackers. Mobile wallets are the closest thing we have to a perfectly secure payments technology.
Q. Traditional card payment systems have been introduced to the EMV or “chip card” devices as the required standard Oct. 1 2015. What are the early results in security maintenance against fraud activities against consumers?
J. O. Early numbers for chip acceptance are very encouraging. Visa merchants, for instance, reported a 42 percent increase in chip card transactions from September to October, with the value of those transactions jumping from $4.8 billion to $9.8 billion. Visa further reported that its partner institutions issued 180.6 million EMV cards in consumer wallets by the end of October 2015. Nearly 70 percent of Americans have at least one chip card in their wallets. On the merchant side, the number of merchants accepting chip cards rose 49 percent to 592,000 since September.
Q. What are your plans for the 2016 ETA conference? Where will it be held?
J. O. TRANSACT 16 promises to be the biggest payments event yet. This coming April, we’re taking over the Mandalay Bay in Las Vegas for half a week of cutting-edge programming, groundbreaking product and partnership announcements, and high-level networking. We want our show to help payments leaders close business deals and the latest, most innovative start-ups open the door to partnerships with seasoned veterans. Our programming will explore the dynamic nature of the payments industry and highlight the biggest developments in our ecosystem. For more information, visit www.TRANSACT16.com.