Beginning three years ago the payments industry in the U.S. was full of hope around the prospects of replacing traditional payment form factors with mobile devices for a more secure transaction and a consumer experience that the industry was really convinced consumers would appreciate. Bucking global trends, it hasn’t been met with the enthusiasm anticipated with mobile payment adoption still today somewhat lackluster. Now the conversation has turned towards the issuance of contactless cards as something of the training wheels version of mobile payments to get consumers use to tapping for payments. An opinion piece in PaymentsSource urges issuers to reconsider this intermediate and potentially expensive step:
Smartphone owners are warming to mobile payments, with half of them using the method in the last year. A Mercator study also found 70 percent of U.S. consumers would use mobile payments more often if they automatically received rewards or discounts, whether for every purchase or accrued over time.
This is a huge opportunity for financial institutions that would otherwise need to invest in making their cards contactless. With POS terminals able to handle contactless requests from NFC-capable smartphones, instead of investing in contactless cards, financial institutions should focus on moving their offerings to mobile and into apps that can do more than simple money management.
It’s along these lines that in 2019, we’ll see many traditional banks leapfrog using mobile technology. Card issuers cannot afford to leave changing customer payment preferences unaddressed — banks face a choice between introducing touch-and-go or being seen as completely out of touch.
All players across the payments industry face pressure to innovate and make the payments experience faster, easier and more rewarding. Overcoming the limitations of their legacy systems is a major stumbling block for banks trying to catch up with the digitization that is causing disruption across the payments and banking industry.
Overview by Sarah Grotta, Director, Debit Advisory Service at Mercator Advisory Group
