There has been a great deal of speculation and high expectations for the growth of contactless mobile payments since the launch of Google Wallet in 2011, but more than three years later mobile payments at the physical point-of-sale have yet to reach critical mass. With Apple Pay launching in late 2014, the number of NFC enabled mobile devices and payment terminals rapidly increasing and several other factors at play, 2015 may finally be the year mobile in-store payments takeoff in the mainstream.
When Google Wallet first tapped the contactless mobile payment market in 2011 it was segmented and difficult to get all the right players to cooperate, there were only a handful of compatible mobile devices, and only some mobile carriers and card issuers were directly participating.
The landscape looks much different today. Google Wallet circumvented the mobile carriers with Host Card Emulation, ISIS became Softcard, merchants formed their own mobile wallet coalition called MCX , and Apple finally included NFC chips in their devices and launched their own mobile wallet payment system, Apple Pay.
Mobile contactless payments have been available in the United States since 2011, but there are several reasons why they will likely grow by leaps and bounds in terms of adoption and use in 2015. First, consider other point-of-sale payment changes that are coming this year. All merchants who currently do not have EMV compliant payment terminals should be upgrading their systems soon in anticipation of the EMV liability shift date. While making the investment in new equipment, now is a great time to add Near Field Communication (NFC) technology as well, and many will. It is likely that Apple was banking on the fact that many U.S. will need to upgrade their POS equipment soon, which is why they waited until recently to launch Apple Pay and the first iPhone with NFC technology.
There are already several signs that mobile payments will bode well this year. The late 2014 launch of Apple Pay made thousands of headlines and enabled many new iPhone users to make mobile contactless payments at many major retail chains. Since launch the number of participating issuers and merchants has grown, and Apple claims that the participating issuers represent about 90 percent of the credit card purchase volume in the United States.
Apple Pay will also be expanding internationally this year. Currently the company has plans to launch in the UK by mid-2015 with more markets to possibly follow.
This success for Apple Pay benefits mobile contactless payments as a whole. Soon after the launch of Apple Pay, it was reported that weekly Google Wallet transactions increased by 50 percent while monthly new users nearly doubled. When merchants upgrade to NFC payment terminals they can be equipped to take several different mobile payment methods, not just Apple Pay. For many merchants, however, Apple Pay was enough to push them into making these upgrades sooner than later.
It won’t just be large merchants accepting NFC mobile payments in 2015 either. Square has announced plans to accept both Google Wallet and Apple Pay in 2015, meaning individual sellers and small merchants will have the ability to accept mobile contactless payments as well.
It is also important to consider that, according to Gartner, shipments of NFC-enabled smartphones reached 550 million in 2014, an 83 percent increase from last year. While this was impacted by the NFC enabled iPhone 6 released in the fall of 2014, it includes many more non-iOS devices.
There are many factors at play, but several signs point to mobile contactless payments reaching new heights this year.
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