The race to establish a dominant mobile payments ecosystem accelerated as Samsung and Visa announced a global partnership aimed at expanding NFC-based contactless payments. By preloading Visa’s payWave technology onto NFC-enabled Samsung smartphones, the initiative sought to simplify mobile payment adoption for financial institutions and consumers alike. The partnership reflects the growing belief among major payments players that mobile wallets will become an increasingly important part of everyday commerce. At the same time, it highlights an ongoing industry debate over which technologies—NFC, QR codes, or other digital payment methods—will ultimately gain the broadest acceptance among merchants, banks, and consumers. As mobile payments continue to evolve, strategic alliances between device manufacturers, payment networks, and financial institutions are likely to play a critical role in shaping the future of digital commerce.
Samsung, which ships about a quarter of the world’s smartphones, will factory-preload the Visa payWave applet onto all of its next-generation devices that feature NFC technology under a global alliance with Visa. Financial institutions may use the Visa Mobile Provisioning Service, launched last year in partnership with Oberthur, to securely download payment account information to the applet in customers’ Samsung phones, thus enabling them to use the devices to conduct contactless payments at merchants equipped with contactless readers.
From Visa’s press release: http://finance.yahoo.com/news/visa-samsung-sign-global-alliance-153000335.html
“Samsung devices enabled with Visa payment functionality will no doubt be a powerful product offering – especially in markets where paying with a mobile device is becoming commonplace. However, the key to making mobile payments broadly available all over the world is to offer financial institutions a secure way to provision millions of smartphones with payment account information – and that is exactly what Visa and Samsung are ready to deliver.” — Jim McCarthy, global head of product, Visa Inc.
Mercator Take: Visa’s making it clear that it sees NFC as the mobile-payments solution of the future, even though more U.S. merchants and other providers are supporting the use of quick response and other bar codes for their mobile-payment initiatives. Visa’s mobile-payments strategy also is much more rigid than that of MasterCard, whose new digital wallet MasterCardPass can support both technologies. This gives financial institutions the choice: they can choose to take a network-driven route, as Visa is supporting, or one based on an internal strategy to be more flexible in terms of the technology to support, as MasterCard’s wallet initiative lays out.
The initial purpose of the Samsung deal is to enable financial institution to launch a mobile-payment service quickly and to a large customer base all at once, globally if desired. How the institutions will identify which customers have the proper phones is unclear. One possibility would be to notify mobile-banking customers of the availability and enable them to opt in and use the applet tied to that service.
The payWave applet is stored in a secure element in the phones, but not in the SIM card. As such, none of the transactions ride on a telecommunication network.
Look for a Mercator Advisory Group research report due out soon by Jeff Green that examines trends in U.S. mobile wallets and how financial institutions will capture a greater share of point-of-sale wallet use in the near future.
See related announcement today by MasterCard on its mobile initiative and read Mercator’s overview : https://www.paymentsjournal.com/Content/Featured_Stories/15358/
