The Year That Many Missed: 2014 Mobile Payment Predictions

About a year ago, the pundits said that 2014 was going to be the year of mobile payments.

Again.

And, nine months into the year, it felt like 2014 was going to be another year with lots of baby steps and no real umph around mobile payments – or enough of it to really move the consumer and merchant adoption needle.

But then September came. September 9, 2014, to be exact, and the launch of Apple Pay.

As Seth Priebatsch, LevelUp’s Chief Ninja said of the Apple Pay launch, “It’s like Christmas for the payments industry.”

Apple Pay energized mobile payments like no other mobile payments innovation has in years.  And, it seemed well positioned to ignite the industry.  Apple Pay reminded consumers that phones do in fact have the capability to make payments, and even turned out to be the rising tide that lifted all NFC-enabled payments boats. Google Wallet’s weekly transactions reportedly doubled (yes, we know that base is very small so it is all relative).

Yet, Apple Pay transactions and doubled Google Wallet users hasn’t been quite enough to spike the market.  And a reminder of the slog that igniting mobile payments is. The “ain’t it cool,” reaction to an innovative or potentially disruptive ideas always seems to inspire wildly optimistic predictions of success and drown out the more practical questions about who’s going to use the “next new thing” and why – and just how long it takes things to change in payments.

So, here we are.

2014 is coming to a close and the payments prognosticators are, again, dusting off their crystal balls in preparation for making next year’s predictions.  (We can already see that they are going to predict that 2015 will be the year mobile payments really ignites – the 10^th consecutive year of such a prediction).  But, before we move on to the forecasts of the future, we thought it would be fun to take a look at some of the predictions made at the start of 2014 to see how they’ve shaped out.

Here’s what was said:

On Consumers Using Mobile…

Guy Goldstein, CEO, Check: “By the end of 2014, the majority of Americans will do at least one mobile payment transaction. We will see significant marketing spent by the big vendors promoting their mobile payment products. More and more big players will partner with mobile payment specialists. We will see a plethora of new payment startups, some major investments and lots of consolidation.”

• Here’s what happened: PayPal partnered with Samsung on mobile pay by watch; Visa, MasterCard and American Express Partnered with Apple; Apple teamed up with China’s UnionPay; Discover announced it would eventually join Apple Pay. PayPal and BitPay teamed up; Facebook partnered with Stripe for its Buy button. Apple Pay hit 220,000 merchant locations. Alibaba starting talking with Apple and PayPal about partnership options.
• SoftCard (yeah, it’s still around) lost its ISIS name and partnered with Microsoft’s Windows phone. It also invested a ton into its mobile payment muppet commercial. Google Wallet announced it was abandoning its in-app purchases.

But the vast majority of consumers have not used a phone to make a transaction. Recent eMarketer research shows that only 13.5 percent of consumers used mobile options to make payments and only 6 percent used a mobile option to accept payments. 82.2 percent said they don’t use mobile payments at all. A majority said mobile payments will “probably” become widely used in the next 5 years, but only 23.3 percent said it “definitely” will be used in the next 5 years.

On The Future Of MCX…

Forbes — Merchant Customer Exchange, or MCX, has declared it will deploy widely in 2014. Next year could well prove to be the year of MCX. Well …

• Here’s what happened: MCX announced the name of the product – CurrentC – that it said would launch in 2015, sometime.  MCX did add merchants to its roster and kept its loyal customer base in the CurrenC boat – big names like CVS, Rite Aid, Wal-Mart and Target. But some members decided to two-time CurrenC when Apple Pay hit the scene. For instance, Mejier reported it would support both MCX and Apple Pay.

So, maybe 2015 will be the year of MCX. We just don’t know which part of it. 

On The Future Of Bluetooth …

Business Insider: “Bluetooth Low Energy will conquer retail”: “BLE is the NFC rival that really will revolutionize payments and commerce in 2014. …We discussed how beacons, which serve as BLE transmitters, can help create indoor communication systems for these purposes. From the perspective of the consumer, the technology is superior to NFC because it doesn’t require close proximity for payments, and BLE-powered payments can happen nearly automatically.”

• Here’s what happened: There are lots and lots and lots of beacons. Samsung launched its own beacon called Proximity and Gimbal spun out of Qualcomm and is entirely focused on beacons. And, in fact, the beacon ecosystem did explode in 2014. But it hasn’t dominated retail the way that many had predicted. The problem? It’s still early days. Consumers don’t seem to be into beacons since they’re more annoying than value added, and their use in payments is still experimental.  Forbes said “beacons said are the gift we’re all getting” this holiday season. Maybe 2014 was the warm up year for beacons and 2015 will be when we see beacons and payments come of age.  

On The Future Of Amazon …

Jordan McKee, analyst Yankee Group: “Amazon will be leveraging the PoS as its avenue to the physical world. With key assets acquired from GoPago and its existing Kindle tablet, tapping into the cloud-based PoS market is a natural next step. We suspect that Amazon will develop an open PoS solution for developers to build applications on top of. …Although we don’t expect an Amazon-branded mobile payment solution to resonate with larger merchants, the small and medium-sized business (SMB) community presents an immediate area of opportunity.”

• Here’s what happened: Well, just about everything else. Yes, Amazon unveiled its Mobile POS solution that allows merchants to accept credit and debit card transactions from a smartphone or tablet. Sort of Amazon’s version of Square or PayPal Here giving Amazon marketplace sellers access to the Amazon.com customer support team, as well as in-app tracking tools. It certainly hasn’t been the on ramp to physical retail in that sense, although Amazon has stuck its toe into the local services business, the one hour bike messenger delivery business and the food services business, and will venture into the travel business in 2015.

On The Future Of Apple Pay …

Bryan Yeager, analyst at eMarketer: “An Apple-branded mobile payments solution could be a catalyst for mobile payment adoption among merchants and consumers in the U.S.”

• Here’s what happened: Apple Pay, happened, of course.  It has the backing of 3 of the 4 major networks and 500 or more of the top bank issuers. It is accepted at 220,000 merchants locations and more than one million consumer cards were loaded into Apple Pay within 72 hours of the app’s launch. Apple Pay certainly gave mobile payments an exciting new lease on life in 2014 but, so far, hasn’t transformed the mobile payment market yet. Nor should we have expected it to in just 60 days. Sometimes, it’s better not to have all of the hype.