Written by Alex Chung, Head Business Development Asia Pacific Japan
As part of the Seamless Payments event series, the Rambus Payments team has been in Singapore, Dubai and Melbourne, discussing the key trends that are driving and shaping the deployment of mobile payment solutions around the world.
So, what did we learn about the state of mobile payments adoption throughout Asia, the Middle East and Australia?
Improving user experience in Asia
China, Hong Kong, South Korea and Singapore are the leading markets for mobile payments globally (Source: Enterprise Innovation). Over half of connected consumers use their mobile devices to pay for goods in-store, with the Asia-Pacific region accounting for 90% of all NFC-based mobile payments globally (Source: Tonetag).
For retailers, the advanced nature of the market provides opportunities to enhance the user experience, increase revenues and reduce costs.
Take Hong Kong and Singapore as examples. As some of the most densely populated cities in the world, the in-store retail experience is often defined by long queues, especially at peak hours.
Retailers who offer a mobile wallet with Virtual Point of Sale (VPOS) capability enable consumers to checkout via an in-aisle payment, removing the requirement to queue and reducing dropout. There is also the potential to integrate ‘order ahead’ functionality to minimize waiting times at the counter.
And the benefits don’t end there. These smart checkout solutions lower overhead costs and reduce the number of static POS terminals required. They also allow cashier staff to be redeployed as ‘hosts’ to further improve the overall customer experience.
Reducing complexity in the Middle East
Mobile payments are beginning to gain momentum throughout the Middle East, underpinned by high smartphone penetration and an advancing payments infrastructure (Source: Mobile Business Insights).
To gain a competitive edge and tap into this growing demand, banks are moving to offer mobile payment solutions to their customers.
To be successful, however, banks must work to manage and overcome the associated complexities.
For example, HCE technology accelerates time to market by allowing NFC-based transactions to be performed by mobile devices without needing to connect to a physical secure element. This enables banks to sidestep the integration and commercial deployment challenges associated with the SE model.
Banks should also consider the ongoing challenges. Tokenization technology is now a security requirement for paying with a smart device. But as banks look to connect with multiple schemes and OEM Pay platforms, as well as keep up with evolving specifications and requirements, managing this process can become difficult. Simplifying tokenization activity should therefore be a key consideration.
Adding value in Australia
Australia is primed to be a world leader when it comes to mobile payments.
82% of Australian consumers use their contactless cards at least once a week, with the annual value of contactless transactions totalling 110 billion AUD (Source: Sydney Morning Herald).
In parallel, smartphone penetration has increased to 84%. And the Australian outdoor lifestyle means that they lead the world in wearable adoption, which is expected to hit 25% by the end of 2017 (Source: Deloitte).
So, it’s no surprise that the big-name banks and OEM giants have all launched solutions.
But adoption has been limited so far, with only 9% of smartphone owners using their mobile device to make a payment (Source: Deloitte). One of the key reasons behind the current lack of momentum is a perceived lack of benefits, with 35% of Australians citing this as the key barrier to adoption (Source: Deloitte).
Indeed, the ubiquity of contactless payment cards works as a disadvantage here. Much of the conversation surrounding mobile payments has been on simplicity and convenience. But when contactless cards already deliver this, there is little additional incentive for consumers to make the switch from plastic to mobile.
This means retailers have a considerable opportunity, as they are best-placed to deliver the value-added services that consumers demand. By deploying a digital retail wallet, they can digitize credit cards, gift cards, loyalty points and coupons into a single, secure platform.
This is how adoption will grow in Australia.
Mobile payments – a global opportunity
It is clear that mobile payments present unparalleled opportunities for retailers and banks across the word. Acting now, moving quickly and delivering an enhanced experience from the outset, however, is key to taking advantage.
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