When Payments Go North

While it still may be a rarity for American consumers to see other shoppers whip out their smartphones and pay with a tap against a mobile point-of-sale (mPOS) terminal, that’s not the case for their neighbors to the north.

As PYMNTS.com’s Karen Webster noted in 2016, use of contactless and other forms of mobile payments in Canada are skyrocketing. Seventy-five percent of retailers in the country now accept mobile payments, 10 percent of domestic transactions use contactless payments, and overall, usage of the payment method is growing at a rate of roughly 1 percent a month.

American Express is hoping that Canadians become even more fond of mobile payments in the near future, as the company late last year rolled out contactless payments for Android customers in the country via its Mobile Pay platform. But while it may seem a little bit late in the game for American Express to make its grand entrance, the company has walked this ground before — it was the first card issuer to let Canadian cardholders make contactless payments via the Apple Wallet mobile payments platform. So far, Kadakia said, the company has been pleased with the initial adoption rates for the new payments program.

And, according to Kenoy Kadakia, the company’s director of product and capability development, the experience gained during its work with Apple Pay has served American Express well during this new venture in Canada. As the company rolled out this Android solution, Kadakia noted that it learned how to evolve with its customers and what features those customers want the most, thanks in large part to lessons learned during its work with Apple Pay.

PYMNTS recently caught up with Kadakia to discuss Amex Pay and what’s on the horizon in the mPOS space.

Evolving with customers

Like most other mPOS systems, American Express’ Amex Pay allows cardholders to pay for purchases by tapping their smartphone against a compatible terminal, with or without the card present.

Amex Pay, like Apple Pay, allows Android mobile phone users to complete transactions this way. However, Kadakia said that American Express has learned that consumers want more than just a simple ability to pay for purchases with their mobile phones — they want to take advantage of features like loyalty and point reward programs that are typically associated with American Express credit cards.

“We had the benefit, as a global organization, to learn from our experience not just in Canada but around the world,” Kadakia said. “And as a result, the ability of our customers to use the features, no matter where they are or how they are accessing them, and the ease of how they can set them up and get going using them — that’s what’s driving our mobile payments service.”

As a result, Kadakia said, the company worked to introduce value-added services to their mobile offering, which would close the gap between features offered by mobile payments and card payments.

As example, he pointed to the company’s Pay with Points program, which allows customers to pay for purchases using reward points they have earned by making purchases. Users can also take advantage of the Flexible Rewards and Lending program via their mobile phones.

Kadakia said that as mobile phones become more powerful, consumers increasingly expect a wide range of features and services to be available through their mobile devices, forcing companies like American Express to adapt to this new landscape. According to a 2016 report from the Pew Charitable Trust, the majority of mobile payment adopters worldwide use the method because of the rewards or discounts a platform offers or because of other features the service offers, such as electronic alerts and budgeting tools.

“No matter what demographic or who they are, customers’ expectations for service has evolved, especially given how people are always connected,” Kadakia said. “They are looking for brands to help simplify their day-to-day life with these features, and so it’s our mandate to evolve alongside that customer base and to ensure we’re constantly meeting those changing needs and wants as they evolve.”

Protecting mobile purchases

Kadakia noted that along with a wide range of value-added services within their mobile offering, security protections are among the chief concern for consumers when it comes to new payment offerings.

And research supports Kadakia’s findings. According to the Pew report, those who have not adopted mobile payments are staying away because of security concerns. More than 70 percent of the U.S. population has concerns about security when it comes to mobile payments.

And per the same study, more than 80 percent of consumers across all demographics want companies to protect their sensitive data and even destroy it upon request, all to avoid having it fall into the wrong hands.

Kadakia noted that American Express’ strategy when it comes to protecting their customers on mobile devices from fraudsters and other bad actors largely mirror their strategies for fraudsters who attack other payment types.

“We look at mobile security in a couple of different ways,” Kadakia explained. “First, we’re form-agnostic, so it’s the same security no matter how you are accessing the service. Then we’ve got internal processing, so we make sure the consumer’s account information is protected, and then we can review activity as soon as it happens. That’s something that has the ability to spot fraud with unusual activities or spending patterns.”

A brighter, more mobile future?

Kadakia said that he expects mobile payments to become even more popular in Canada and around the world, as the company has already seen a large uptick in mobile transaction volume as more consumers get used to the idea of making purchases with their phones.

And according to the Pew study, that increase in usage will likely continue, particularly as millennials and younger consumers, who have been raised under the influence of smartphones and other mobile devices, age into spenders. Pew study researchers found that 90 percent of millennials and 83 percent of Generation-Xers own a smartphone, and an increasing percentage of them are using those phones to make purchases.

As a result, Kadakia said, American Express is eager to add new features to its mobile offering, in order to continue to evolve with its customers’ demands and expectations.

If current trends continue, we may be on our way to an even more mobile future — and, yes, that could mean those mobile wallets will increasingly be tapping against mPOS terminals far and wide.

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The PYMNTS mPOS Tracker is your go-to resource for staying up to date on a month-by-month basis. The Tracker highlights the contribution of different stakeholders, including institutions and technology coming together to make this happen.