The 9th of September. That’s the date Apple will unleash its latest and greatest iPhone on an expecting world. The first iPhone set the scene for a sea change in personal computing in 2007, proving to be the catalyst for smart phones and apps going mainstream. Ever since, just about every tech blogger has spent the build up to each Apple event guessing what new features will be included and how this will again move the mobile world forward.
Such is Apple’s status – the global brand has a reputation as something of a technology ‘kingmaker’ – and this year, a number of signs are pointing to the mobile wallet. For some time, mobile wallets have been on the agenda; Google’s offering has been available for some time in the US, while Amazon launched its wallet stateside in July. Clearly the industry sees mobile wallets as a key component in the future of payments.
But, what has been driving the likes of Google, Apple, Visa and PayPal to make digital wallets a consumer reality? For banks and the like, there is an obvious logistical advantage. The cost of fulfilling credit and debit cards is not limited to the production of the card itself; it includes the management of distribution of cards and maintaining dedicated customer helplines to activate or reorder lost, stolen or expired cards. With this in mind, it’s no surprise that financial institutions are embracing digital wallets which would provide a cost-effective alternative.
Winner takes all?
Up till now, however, consumers have remained relatively cool on the technology. In the UK there are very few live digital wallets, with Starbuck’s and EE paving the way by providing customers with the ability to “preload” funds for payments via their smartphones. That said, much has been made of the so-called ‘Wallet Wars’ and the fragmentation borne out of multiple merchants, banks and other players looking at bringing their products to market. Like with a real physical wallet, the average person only wants one where they can keep all their credit, debit and loyalty cards. The challenge with a single wallet for all cards is which cards take precedence. Each issuer wants their ‘card’ at the front of the wallet, meaning that card issuers are asking for their own wallet so as not to be marginalised by competitors.
Much of the success of digital wallets will come down to consumer choice. Presently, there is no real choice in the UK, although Paym is the big move by the banks into mobile payments it only operates on a person-to-person basis, like Barclays’ Pingit app, neither of which enable the customer to pay in store. Should Apple fully enter the fray though, they have the infrastructure and relationships to make this a possibility. Couple this with the company reporting to have over 800 million iTunes account holders and the capacity to make exciting bleeding edge technologies desirable and user-friendly, we could have the first truly compelling digital wallet offering. It would do the technology’s chances no harm if it were to come pre-loaded on the most popular handset around too.
The security question
With any payment solution there are also always consumer concerns around security. In fact, a recent consumer survey found that while 80% of US consumers are aware of digital wallets, security concerns are the main barrier to adoption. What we have seen is that device security itself is not the primary way this concern manifests itself, rather what happens when a consumer loses their phone and what happens to their card details if this does happen.
In the early days of mobile wallets and Near Field Communication (NFC) the focus was on storing card details on a secure element on the device SIM – if you lost your phone, your card details were lost too. Now, however, there has been a move towards Host Card Emulation (HCE). HCE allows NFC payments and value-added services to be used on a phone by storing card details in the cloud rather than on the device itself. This is much safer and means that should a person lose their phone, their card details are not compromised.
Should Apple launch the iPhone 6 on 9th September with NFC and a partnership with Visa for mobile payments, it would be fair to expect mobile wallets to filter into the mainstream. iOS retains over 30% of market share in the UK alone, and over time has built trusted relationships with its user base that could convince them to take the plunge and embrace wallet technology. The ecosystem is there and solutions like HCE are in place to allay the security fears of sceptics.
If all goes to plan – and it seems the industry is willing it to – we could be paying for our iPhone 7s in September 2015 with the pre-loaded digital wallets on our iPhone 6s.
Mark Prior-Egerton, Solutions Marketing Manager, The Logic Group
PrivSec Conferences will bring together leading speakers and experts from privacy and security to deliver compelling content via solo presentations, panel discussions, debates, roundtables and workshops.
For more information on upcoming events, visit the website.
comments powered by Disqus