Rambus CMO Jerome Nadel has written an article for IDG Connect about the changing mobile payments landscape. According to Nadel, the mobile payments ecosystem has evolved into a complex network of providers that includes card networks, issuers, gateways and acquirers.
“Previously, banks owned the processing, transaction fees and customer data. Now, merchants and OEM payment methods are challenging this model with more competitors demanding a portion of the transaction fees,” he explained.
“New payment technologies such as mobile wallets have helped them do just that. [For example], Apple Pay, Android Pay and Samsung Pay [are] disrupting the mobile payments landscape.”
However, as Nadel notes, while 52 percent of North Americans are “extremely aware” of mobile payments, only 18 percent use them on a regular basis.
“One reason for this is that while there are many new OEM payment methods, these payment methods today do not integrate loyalty points, gift cards and discounts in a way that create a frictionless and enhanced experience for the consumer,” he elaborated. “Ultimately, this means new payment methods are simply battling for a fixed customer base rather than growing adoption through innovation.”
Nevertheless, eMarketer sees a $10 billion increase in mobile payments in the US by the end of 2017, while 60 percent of the UK population is expected to use mobile payments at least once a week by 2020 (according to Visa Europe). As Nadel points out, further accelerating mass adoption is contingent upon secure technologies being made open to the ecosystem for banks, merchant acquirers and retailers.
“By unifying payment platforms that bring payment, loyalty programs, gift cards, coupons and ultimately other forms of digital value together in a single mobile wallet, all the players in the payments ecosystem [can] deliver a frictionless and enhanced shopping experience,” he added.
Indeed, merchants have traditionally relied on third-party providers such as banks or merchant acquirers to provide the transactional interface. In doing so, says Nadel, the merchant adds costs and often loses out on transactional data insights to their ‘payment DNA.’ However, merchants can capture rich insights into their customers by deploying a unified payments and loyalty services platform with a personalized consumer user interface.
“The benefit [of such a platform] is great and goes beyond efficiency and reduced processing costs,” he explained. “[For example], account-based transaction models give key insights into shopper history. This data can be integrated with marketing technologies such as CRM systems to provide additional personalized services at the point of sale – discounts, offers and loyalty points.”
In addition, Nadel emphasized that a robust layer of security must underpin mobile transactions, with a unified platform registering, authorizing and provisioning various credentials.
“In a landscape of ever-increasing technology and business model disruption, accelerated adoption and pull from consumers defines success, trust, convenience and perceived value are the ingredients that will propel mobile payments and digital wallets. Unifying various types of digital value and enabling consumers to easily shop and pay is the tipping point to broad adoption,” he concluded.