In the first hours of 2016, there’s one general observation to be made about the payments industry in 2015: Mobile drove the payments innovation bus.
Mobile — and its impact on payments and commerce — swept the headlines in 2015, as it will in 2016 and the years to come. But what may not be as telling is its impact on the year to come.
That’s why PYMNTS decided to wrap up 2015 with an in-depth look at the major mobile pay players that framed today’s conversations that will shape the innovations of tomorrow. Those very conversations, like those at PYMNTS’ 2015 Innovation Project, are the ones that will create a real change in how money is thought about, moved around and spent.
“More than any other, mobile is the ecosystem that has given rise to the sea change taking place in payments today,” MPD CEO Karen Webster said, speaking to a group of payments executives and innovators in March 2015 at Harvard University. “The mobile devices that are owned by nearly every single human being on this planet and never far from their reach are part of an ecosystem operated by some of the most powerful players in the world. And now, among the biggest names in payments.”
We looked at 14 of them and the mark they made on 2015 — and the conversations they will likely dominate in 2016.
The biggest news to come out of Apple Pay this year didn’t actually come from Apple.
PYMNTS and InfoScout reached out to 2,000 consumers with either an iPhone 6 or iPhone 6 Plus three times over the year and asked them about their experiences with Apple Pay. While those who tried it, loved it, there just weren’t that many who did.
In March 2015, only 15.1 percent who were at stores that accepted it had tried it; in June, 13.1 percent of that same group did, and in October, 16.6 percent did. Roughly 5 percent of those who can (with the right iPhones) at the right merchants (with the right POS hardware) consistently used it. Not exactly the “Year of Apple Pay” that Tim Cook had hoped for.
Apple Pay also took its show on the road, going global, where it faced its fair share of headwinds, too. Issuers balked at the basis points on each transaction. Outside of the U.K., American Express seems like the only partner willing to play ball the Apple Pay way.
In 2016, it will be interesting to watch Apple Pay focus its strategy on how to get more of the “right” iPhone users to use it at the “right” merchants. What Apple Pay can try to do is give consumers more reasons to use Apple Pay where they can. What is harder is getting merchants to accelerate their NFC timetables, especially given the lackluster embrace of Apple Pay and NFC so far.
September, which is typically Apple’s launch month for new services, saw another mobile payments player get a lot of buzz right off the bat.
Samsung Pay entered the market with what it claimed was a distinct advantage: technology that allowed it to be used at almost any card terminal. That claim has been at the center of all of its commercials, too.
That’s because Samsung Pay leverages MST technology, which mimics a mag stripe swipe at terminals that accept mag stripe swipes, which is mostly all of them. The Samsung mobile payments technology traces its genesis to the acquisition of LoopPay in Feb. 2015, which had the MST patented technology that now powers Samsung Pay.
While we don’t quite know Samsung Pay’s adoption figures, the company released early data saying that consumers who use Samsung Pay use it for roughly eight transactions a week. But Samsung is still mum on the actual usage numbers.
The most interesting thing about Android Pay’s debut was the fact that it was less about debuting as a mobile payments player and more about debuting as a mobile commerce platform. Its actions, therefore, are focused on giving consumers choice by connecting them to the commerce opportunities via apps that make their experience seamless, more secure and faster.
“We’ve taken a fundamentally different approach than the rest of the players by using a platform approach. We are not saying we need to control end-to-end experiences … We were talking about a platform,” Pali Bhat, Google’s director of product management for Android Pay, told Karen Webster in an interview. “Android Pay is an ingredient that can be part of an app experience and the various commerce platforms and the solutions delivered by other ecosystem partners, whether it’s banks that want to add Android Pay to their apps or merchants that want to add Android Pay to their apps.”
Google announced December that Android Pay is an in-app payment option now, too, and is already accepted at more than 1 million merchant locations throughout the U.S. (just about everywhere Apple Pay is), with big plans to continue the global expansion of the payment method.
Google Wallet has made its share of news throughout 2015, including news about upgraded features, like transaction searches and map widgets that show the location of purchases.
But the biggest news was its transition away from an acceptance mark to a “wallet,” which can store value, move money between people and businesses and enable transaction monitoring — just like a digital “bank” account — and do it across operating systems. Google Wallet is available for use on Android and iOS.
As a precursor to that, Google also took the necessary steps to make its mobile payments service FDIC-insured — giving its users a safer way to store their money.
Just this month, Google expanded the functionality of its mobile payments system when it announced that users can send money by using just a phone number. With the latest version of the app, funds can be sent directly to a mobile device with a secure link via text message. The recipient can then use the link to enter their debit card information in order to claim the money, which will be available in their selected bank account in minutes.
PayPal’s 2015, of course, was marked by its (re)entry into the world of publicly traded companies when it IPO’d on July 20.
PayPal, AKA PYPL (we can’t help but admire its penchant for a ticker symbol without vowels), went public again after billionaire investor Carl Icahn said that eBay and PayPal were better apart. PayPal debuted with a market cap of ~$47 billion (to eBay’s ~$34 billion) that day. Today, PayPal’s market cap is ~$46 billion.
Since then, PayPal’s foray back into the public world has come with plenty of milestones.
PayPal acquired international money transfer provider Xoom for $890 million in an all-cash deal in early July. With Xoom, PayPal has access to its 1.5 million active U.S. customers. (PayPal has ~180 million accountholders in 203 countries.) Xoom’s last quarter results showed those customers sent $7.1 billion to people in 40 countries. Xoom also has a strong mobile user base, with 60 percent of its active users on mobile and 97 percent of its volume coming from repeat users.
In a nod to the inevitability of EMV, PayPal also rolled out the PayPal Here Chip Card Reader in the U.S. this year, which followed its U.K. and Australia launches. The reader is compatible with iOS and Android devices and accepts chip cards (both EMV chip-and-PIN and EMV chip-and-signature), magnetic stripe and NFC transactions, including Apple Pay, Android Pay and Samsung Pay, along with other NFC-enabled devices and cards.
In October, PayPal CEO Dan Schulman reported on the changes the financial services industry is undergoing because of the rise of mobile technology. PayPal’s latest data shows there are more than 23 million active PayPal mobile users. In 2014, PayPal processed 1 billion in mobile payments for a total of $46 billion in payment volume. We’ll soon learn how 2015’s figures stack up.
In June, PayPal also announced that it was the power behind four of the five Pinterest Buyable Pin partners, enabling commerce on its popular social platform.
In early December, PayPal announced that more than 1 million merchants (50 percent of the Internet Retailer 500) and 10 million users have enabled One Touch payments, which enables a frictionless method of paying on mobile.
And then, toward the end of 2015, it was announced that PayPal’s Braintree would power Facebook payments, serving as the launch partner of its new transportation services division that would enable users to order and pay for an Uber via Messenger.
While the tail end of 2015 seemed to be the busiest for most of the mobile payments players, MasterCard’s focus was steady all year long with its MasterPass platform.
Which was mostly about making MasterPass everyone else’s wallet.
“MasterPass is not just a wallet, it’s the entire digital payment system. The wallet is just one part of it, and frankly, we are not launching the wallet branded [for] us. We’re basically giving that wallet out private label to issuers and merchants who want to use it as way of expertizing the launch of wallets,” MasterCard CEO Ajay Banga said at the Sanford Bernstein Conference in May. “I don’t think being in the wallet game is the game that I want to be in. I want to be in the digital world, what I am in the physical world, which is the brand and the front righthand side of the card, when you see it you know your card will work.”
In May, Banga also offered a few stats about MasterPass that showed the acceptance milestones it had achieved: ~250,000 merchants in 24 countries and plenty of plans in the pipeline to continue scaling Banga’s vision.
2015 was the year that MasterCard extended its tokenized checkout experience within its MasterPass digital wallet, which was the first instance of tokenization in an online environment.
And the firm extended MasterPass through partnerships. It partnered with PAY.ON to expand MasterPass, making it available to more than 110 payment service providers using PAY.ON’s white label global payment gateway. Because of this partnership, MasterPass will also be available for more than 56,000 Web shops worldwide that will route their payments through the PSP partners of PAY.ON.
MasterCard’s global Masters of Code Global Hackathons, the 10-city event, proved to developers the degree to which it could be easily be integrated into a digital/mobile environment.
Checkout launched in July 2014, replacing V.me — Visa’s 2012 entry into the mobile wallet horse race. Unlike V.me, which was a wallet, Checkout is an acceptance mark, allowing a consumer to register any network-branded card and then use it anywhere and everywhere Visa Checkout is accepted in, more or less, one click.
A year later, we learned that Visa Checkout was well on its way to expanding its global reach, with more than 6 million users under its belt and more merchant acceptance, too.
In an interview in August, Chris Curtin, Visa’s CMO and chief digital and innovation officer, told Karen Webster that comScore data showed checkout times that were “22 percent faster” with Visa Checkout. And that, on average, 12 percent more transactions were completed using Visa Checkout across all eCommerce sites.
In October, Visa also announced that tokenization was part and parcel of Visa Checkout so that customer card numbers that merchants already had stored in their systems could more easily facilitate multiple payments (subscriptions fees, for example, or billing services).
Visa Checkout also moved into a major market: Brazil. Visa positioned this as significant given Brazil’s smartphone claim to fame: more smartphones than people (272 million to 199 million). Visa partnered with FutebolCard, a Brazilian startup that lets soccer fans quickly and easily buy tickets to matches in 12 stadiums across the South American country.
Alipay, the highly popular mobile wallet of Alibaba’s financial arm, Ant Financial, underwent a bit of a makeover.
In July, Alipay 9.0 rolled out, which the company called its “super app.” With what was once known as Alipay Wallet, users could now use new features, such as P2P payments, merchant loyalty and social messaging.
Alipay also secured deals with Walmart in China so that its customers could use Alipay in 25 of its stores. Alipay also partnered with KFC and McDonald’s to enable payments via Alipay at their stores.
Stripe and Alipay announced its integration, and Stripe began to market its ability to bring easy Alipay integration to its mobile platform.
Nowhere is Alipay’s dominance more pronounced than during Alibaba’s Singles’ Day — AKA the massive mobile/online shopping day that, this year, drove more than $14 billion in sales (a 158 percent increase from 2014.). During that 24-hour shopping holiday, Alipay processed 710 million payment transactions, and during the peak hours, it processed 85,900 transactions per second.
In October, Chase finally lifted the veil on its plans for mobile payments with Chase Pay — a mobile/digital closed loop network of merchants and consumers.
One of its key differentiators is its embrace of a “merchant-friendly” value proposition in the form of favorable payments economics, integration of existing merchant loyalty programs into its mobile payments platform and its indemnification of the merchant against any consumer-initiated fraud.
Not to mention the auto-provisioning of its 94 million cardholders into the app. One out of every two households in America is a Chase customer.
And its announced partnership with the network that was designed to be the mobile-only, merchant-friendly network: MCX. But hold that thought for a minute.
Gordon Smith, CEO of consumer and community banking at JPMC Chase Cards, introduced Chase Pay as a mobile payments solution that provides a “true omnichannel” payments experience — in-store, in-app and online purchases — and built the case for why he believes Chase Pay will be a formidable force in payments.
In the world of Chase Pay, the Chase account will operate as a platform for enabling a variety of data-driven and personalized offers and promotions to Chase Pay customers, including the integration of the merchants’ own loyalty programs. Its mobile/digital closed loop network of merchants and consumers will use QR codes at the physical point of sale to enable payments and the Chase Pay “buy button” to initiate payments in-app and online. Chase Pay will include a number of features and functions that leverage Chase’s massive base of 94 million consumers and merchant services capabilities via Chase Commerce Solutions.
The rollout of the 100,000 merchant locations that are part of the MCX network will begin in mid-2016.
Well that was then. And this is now.
There may not be an MCX to partner with. Especially since the merchants that were the biggest part of MCX look to be defecting to their own mobile payments schemes. Like Walmart, Target and Dunkin’, who have each introduced (Walmart and Dunkin’) or are rumored to introduce (Target) their own mobile payments apps.
Speaking of MCX, what happened in 2015 for this merchant coalition?
Well, a lot that may actually spell its demise in 2016.
May brought about a major leadership change, as MCX’s Dekkers Davidson stepped down to pursue “other opportunities.” That led to Brian Mooney taking over as CEO, which eventually flipped from “interim” to “official” in a period of a few months.
In August, Mooney gave Karen Webster an inside look into CurrentC’s future, which included the announcement of a public beta in Columbus, Ohio. It was said to be going well, but there were few specifics other than the general vagaries of “great learnings.”
In October, CurrentC announced it was adding Buy It Mobility Networks’ (BIM) ACH payments to CurrentC, which would allow consumers to connect checking accounts to the CurrentC mobile wallet app. But we thought that was what CurrentC could do before, since that was the whole CurrentC payments shtick.
And the picture got even murkier when Walmart announced Walmart Pay. Walmart is, of course, the inventor of MCX/CurrentC, which suggests that something is rotten in the state of Denmark, or Ohio, as the case may be.
2016 should be a most interesting year, or not, depending on where you’ve placed your bets on CurrentC/MCX.
Speaking of interesting, two of the largest retailers in the country are throwing their own hats into the mobile payments ring.
Walmart debuted Walmart Pay in early December. This mobile payments app will enable consumers to pay at the physical point of sale using their Walmart app and QR codes. ComScore says that there are 22 million of those users in a Walmart store, on any given month, using its app. Walmart’s hoping to convert them to mobile in-store wallet users and then some.
Which, of course, is the antithesis of the MCX agenda — low-cost payments method. With Walmart Pay, any payment method saved to the app can be used.
And any smartphone running any operating system.
While Walmart says that it will continue to support CurrentC, that’s sort of like saying to a long-time boyfriend that you just broke up with that you can still be friends. It usually doesn’t happen.
And for Target?
While this hasn’t been officially confirmed by Target, unnamed sources said to be “close to the matter” said the company is in the early stages of its mobile payments plans. What this plan involves, according to said sources, is launching its own mobile wallet app similar to those in the market that enable consumers to make mobile payments at the point of sale.
Sources indicate that Target’s mobile wallet plans involve integrating the payments part into its mobile app, a la Walmart. Target is also looking beyond NFC and instead will rely on QR codes, too.
And to wrap up the year of mobile, what better way than to look at two players who are vying for customers in the mobile space and who are getting to payments through a very different method: loyalty.
With Mobile Order & Pay just crushing it in 2015, Starbucks’ latest public reports confirm that it is now processing more than 10 million mobile transactions a week. And, since launching Mobile Order & Pay in September, it’s reported that U.S. mobile ordering and payment has spread quickly — recently accounting for more than 20 percent of transactions in the U.S. in October, with increased spend per ticket. Its fourth quarter results already revealed that its mobile user base was up 32 percent from the year prior.
And on the Dunkin’ Donuts side, the Boston-based coffee company also announced a few new programs of its own. In November, Dunkin’ launched its On-The-Go ordering platform in 124 select locations in Portland, Maine. Leveraging CARDFREE’s mobile payments platform, Dunkin’s On-The-Go platform allows DD Perks loyalty members to order and pay ahead and simply pick up in-store.
Dunkin’ also began testing its delivery service at 19 Dallas restaurants and has plans to add delivery to Atlanta, Chicago, Los Angeles and Washington. And while Dunkin’ trails Starbucks’ mobile service, it doesn’t so much think that dominating the market is about being first — it’s about being better.
How interesting that the enterprises that opened our eyes to the power of mobile payments are those whose products open our eyes each morning with their jolt of caffeine!
2016 will certainly show consumers how coffee purveyors create a habit that is more than just getting that cuppa joe — how integrating loyalty, eliminating payment frictions, reinventing the experience and adding value does help drive more and more customers to adopt the mobile payments habit.
Not a bad resolution for 2016.