Mobile Payments – Invention vs Adoption

I am currently on vacation in the USA which has brought home to me the challenge between the rapid pace of invention and innovation in the field of Payments versus the challenge and pace of adoption.   Two examples of paying for services highlighted this gap.

One well known retail chain here in the U.S. had just introduced “chip and pin” to its point of sale terminals. This appeared to cause some confusion to a number of customers queuing in front of us who had been used to signing the sales slips for so many years before. Moving on a few hours to the restaurant we ate at in the evening, the transaction was paid for again via credit card but, on this occasion, I was presented with both the merchant and customer paper receipts onto which I had to manually add the tip and provide a new total.   This would then require further work behind the scenes for the correct amount to be entered into the restaurant’s merchant system so that the (hopefully) correct amount will be charged to my card.

In contrast, the TV channels here in the U.S. are busy showing adverts for Applepay and the Tech headlines are highlighting the race between Google and Samsung to launch the next mobile Payment software; one for Android and one for Samsung devices. At present, Applepay is only available on the iPhone 6 and above and the iWatch. However, over the next eighteen months many more people will become “eligible” to use this new method of paying as their maturing mobile contracts allow users to upgrade from their iPhone 4’s and 5’s. Ditto, presumably, for where Samgung and Google Android will be heading.

However, seeing where things currently stand in the U.S. retail arena, I could not help wonder how many Companies will upgrade their Point of Sale terminals/merchant systems in the same timescale to use this latest technology?   Some will, but I would lay money (either crypto or physical) on many not having done so given the slow pace of adoption of earlier technology.   Will these businesses then lose ground to more tech-savvy competitors?   Similarly, can the combination of Apple/Samsung and Google Android provide the necessary pressure in terms of the total population of mobile users who would want this functionality to force change at Point of Sale?   I am very conscious that, with all new technology, there is a rash of early adopters.   However, will the silent majority also move sufficiently to force the pace of change?

Broadening the topic further, for some markets, this also then highlights the disparity between those mobile payment mechanisms that can simply be used to pay for something via the credentials of consumer’s physical cards being loaded onto the device versus those that are bespoke to Banking institutions for the transmission of and receipt of customer funds.   Until a mobile payment system can do “everything” will it sufficiently appeal to the wider population to adopt it as opposed to the tech-savvy minority?

Turning finally to the Eurozone, I wonder whether PSD2 and XS2A could be the key towards the full enablement of mobile technology. In a few years’ time, could the purchase of a smartphone enable a consumer to fully link the proprietary mobile payment software embedded within it to all of their accounts held across a variety of banking institutions as well as to their debit and credit cards?   That would then provide a single and straightforward authenticated “portal” to all payment services plus the ability to pay for anything, anywhere and at anytime (either with funds permitting or credit being offered).

As a closing thought, could regulation therefore be the mechanism that finally confirms the full arrival of Mobile Payments and therefore generate the necessary force to bring alignment at point of sale?