Apple may have given NFC-based payments a new lease of life by making them the center of its new Apple Pay offering, but it will still face significant opposition to its attempts to dominate such a crucial area of the mobile web business. Retailers like WalMart and, naturally, other major web payments players like PayPal and Amazon will be readying their response.
Despite an impressive line-up of supporting merchants at the Apple launch, the world’s largest retailer is refusing to join Apple Pay and will instead persist with its own platform, called CurrentC. This will not roll out until next year, but is supported by a group of powerful players alongside WalMart, including Target, 7-Eleven, Southwest Airlines and Gap.
With the US operators (Verizon, AT&T and T-Mobile) also pushing an NFC-based system which they can control, in the form of SoftCard, and Google offering its own Android wallet nationally, there will be considerable consumer confusion over which payments system to adopt (if any – consumer lethargy has been one factor limiting the expected uptake of NFC so far). Here, Apple may have the advantage, since it has a strong track record in making new services easy to use, and persuading its customers to try them.
Steve Perry, chief digital officer at Visa Europe, told Banking Technology: “This is a big step forward. With Apple on board, NFC gets the final seal of approval it needs. Apple’s formidable strength is in convincing consumers that they need something, so in that regard its support of NFC is a turning point for worldwide consumer adoption.”
However, its impact is naturally limited to its own iDevices, so alternatives will be required, and even within its own walled garden, response has been mixed. Kieran Hines, practice leader at analyst firm Ovum, commented: “What really leaves me unimpressed is the lack of ambition. The future of mobile payments in retailing is all about using the handset both in-store and remotely to browse, get more product info, receive promotions, and place orders. Given things like iBeacon, I’d expected Apple would look to create some kind of slicker retailing experience, with payments in the background.”
This reflects the view that NFC itself should be an enabler, not the centrepiece as it has often become – and indeed, the payments mechanism is unimportant to the experience, and does not necessarily have to be NFC-based at all. The giant of online payments, eBay’s PayPal, has experimented with the contactless technology but has been more favorable towards alternatives which do not require specialized merchant terminals or devices.
Having been working intensively on its own solutions for m-payments, as part of a broader end-to-end online commerce platform being created by eBay, PayPal was understandably ungracious about the Apple Pay launch, in which it was left out of the list of payments partners. It hit back with a full-page advertisement in US newspapers including the New York Times, whose tagline was “We the people want our money safer than our selfies’. While not mentioning Apple by name, it was a clear reference to the recent high profile hacking of Apple’s iCloud, which led to the leaking of some celebrities’ naked photos and threatened to overshadow the iPhone event, especially the Pay aspect, with security fears. Apple denied that its systems were breached at all, but PayPal was still tapping into widespread doubts about smartphone-based payments and their possible security flaws.
The focus of debate about m-payments is often the US, but the area of real activity is Africa, where successful business models have been created – in contrast to western markets – around simple SMS-based platforms geared to the ‘unbanked’. Vodafone’s M-Pesa has been the flagship, but rivals are following suit.
Emerging markets telco Millicom has a service called Tigo Pesa which has 3.5m users in Tanzania, and it has now added a ‘Wekeza’ savings option which allows customers to automatically earn a return on their balance direct to their wallet. Millicom has 4.7m mobile money customers in its six Tigo operations in Africa and 2.7m in six countries in Latin America.
India’s Bharti Airtel is also pushing mobile money services out in its African territories and has signed a deal with VeriFone Mobile Money to offer its merchant enablement applications, supporting mobile ‘Tap n Pay’ transactions across their 17 operating companies in Africa. Consumers can use the NFC Tap n Pay applications to pay, buy, bank, bill and remit funds with their mobile phone at the point of sale.
And Orange has expanded its partnership with the Bank of Africa group to offer new mobile financial services in its extensive African markets. The companies will support direct money transfers between Orange Money and BOA accounts via the handset, allowing users to transfer money, pay for goods and services and purchase airtime credit. Cash withdrawal will be available from Orange Money distributors and BOA’s 450 branches.
The service has gone live in Madagascar and will be extended to Côte d’Ivoire, Mali, Senegal, Niger and the Democratic Republic of the Congo in the coming months. Orange Money has more than 11m customers in 14 countries in Africa and the Middle East.