The mobile payments battle for consumers has heated up in 2015, with some technology giants stepping firmly into the limelight to do battle with big banks and established payments companies.
At stake are brand reputations, customer loyalties and the chance to lock in steady revenue streams.
The most clear-cut example in recent times has been Microsoft's announcement that it was planning to introduce a "tap and go" system on all devices that run Windows 10 in the approaching Northern summer.
This will no doubt be needed to revive the fortunes of its recently acquired handset maker, Nokia. The Microsoft mobile payments system will use host card emulation support, allowing the mobile to make secure near field communication (NFC) payments via cloud computing – that is, without the extra security hardware that is included on a SIM card.
This means Microsoft will work directly with the major card companies to bring its own contactless payments service to market, rather than negotiating with a swarm of phone companies.
Lest anyone doubt their bona fides, fintech consultant Faisal Khan reportedly checked financial regulators in the US and found Microsoft has filed for "money transmitter" licenses in all 50 States and has received its first license in Idaho.
Facebook is also getting in on the mobile payments act, with the help of the major debit card companies. The social media player has realised that friends lend to and borrow from each other, so have introduced a free money transfer via Messenger – better known as a payments processor for gamers and advertisers, with the proviso:
"It may take one to three business days to make the money available to you depending on your bank, just as it does with other deposits."
(see article Money via Messenger)
And each side of the transaction needs to have a debit card issued by a US bank.
The handset manufacturers themselves are also giving payments companies a shake-up. The much vaunted Apple Pay has stalled after a big rollout in the US, though, with no sign of when it will leave its home market, opening the door for an attack from Korea's smartphone giant, Samsung (see article Apple Watch)
The electronics major has decided to turn mobile payments into a loss-leader, through its decision not to charge fees to credit card companies and others whose customers are using Samsung Pay in Korea – and elsewhere.
The thinking apparently is that it'll be more useful to forego any fees to gain smartphone market share from rivals such as Apple, while building capability, distribution and merchant acceptance for handsets equipped with Samsung Pay, running on Android operating systems.
The renewed focus on Android systems is being pushed along by another tech giant, Google. A revamp of the ailing Google Wallet product that’s been around since 2011, the new Android Pay solution – based on Softcard (a collaboration between several US banks and phone companies, formerly known as Isis) – is set to take on Apple Pay from May 2015.
With most financial players of any scale running mobile banking apps, contactless mobile payments is becoming the new battleground.
In the Australian market, the Commonwealth Bank, keen to emphasise its technology leadership, has claimed first mover status in offering software that will let Android users – and this isn’t limited to just Samsung Galaxy users – to use their phones to make contactless mobile payments.
Tap & Pay for Android, the bank says, will allow users to make MasterCard or PayPass purchases up to $100 by tapping their phone onto the terminal.
“There has been 142 per cent increase in transactions, which translates to 4.7 million transactions a week through mobile banking – these are quite big, big numbers,” according to Lisa Frazier, executive general manager of digital channels at CBA.
And in early April, CBA went one step further, announcing a CommBank app for smart watches, with the Android version currently in pilot and an Apple Watch version on the way. However it seems that Westpac and St.George customers will actually be the first to do their banking using the Apple Watch.
Business operators are meeting their customers' demands for mobile payment options, too – a trend that has led accounting software provider MYOB to co-opt mobile payments into its suite of products. From March this year, the MYOB PayDirect system was upgraded to accept EFTPOS payments, the most common type of card transactions in Australia.
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