The Future of Mobile Payments
Hi Jérôme, what do you work on at Worldline?
I am a Business Developer in our PPC entity (ed: Payment Processing Center) which is part of our FPL Business Unit (ed: Financial Processing & Software Licensing). In this function, I am in charge of the development of our Mobile Acceptance offer.
When did you join us and what were you doing before?
I first joined Atos in 2001 and then moved to Worldline in 2009. Before that, I was a consultant in the Banking and Insurance industries before integrating the Banque Populaire group.
You recently participated in a conference about technologies related to mPOS (ed: Mobile Point Of Sale), what has changed, concretely, in the last few years?
Clearly, the level of the equipment rate in smartphones and, more generally, the ability to multiply the mobility uses really changed the game.
mPOS, while it is well developed in the United States, is barely starting in France and in Europe, where related offers and solutions arrived later. In addition, security requirements are more stringent here. As of today, the French mPOS market is having difficulties taking off despite multiple available solutions. The retail and transportation industries’ business needs will be the drivers for this market, in conjunction with the Mobile Acceptance solutions provided by the banks.
What are the impacts of mPOS for consumers?
Once mPOS is more widespread, consumers will be able to pay with their credit cards at any point of sale even those not equipped with payment terminals. In particular, small craft stores, liberal professions, local authorities and street vendors come to mind but this list is not all-inclusive. Indeed, there is also a wish coming from brick-and-mortar retailers to have indoor Mobile Acceptance in order to provide their customers with the ability to bypass the checkout process at the register, its inherent long lines and the showrooming effect. mPOS will even enable the checkout process to happen directly in stores’ aisles.
What will be the impacts for merchants once the mPOS market has taken off?
Two phases will occur for merchants:
- Merchants, who previously could not accept cards due to technical hurdles or to high costs, will start equipping themselves and mPOS will allow them to do so more easily.
- Fixed payment terminals will be replaced by mobile terminals. These new terminals will be used for payments at counters as well as on-the-go payments throughout stores.
And what about the banks?
The majority of the larger French banking groups have launched their offerings between 2013 and today. Additionally, others players launched similar offers in the mobile phone industry. The current available solutions all share the same business model based on pay-per-use and a significant commission rate. The market is slowly taking off and it is my opinion that there is room for a different model with a much more aggressive pricing which would boost the market. We will have to wait a few weeks to see if this happens.
NFC and contactless payment have been the talk of the town for a while now, what is your take on their adoption rates by consumers in France and in Europe? How do you envision the evolution of this technology and its use in the future?
It is true that NFC has been getting a lot of coverage lately. On one end, the banks are delivering NFC-ready cards to their customers by default (ed: about 50% of cardholders have a NFC-ready card in France today). On the other end, merchants are slowly gearing up with NFC-ready terminals (ed: a little less than 20% of the terminals installed in France have NFC today). But consumers have yet to truly adopt this technology and its adoption rate is not proportional to its equipment rate.
It is likely that, in the future, consumers will want to use this contactless payment method more and more often and for larger amounts. As of today, the standard NFC payment is limited to 20 euros and consumers need to enter their security code for larger amounts. The time benefit is there but it is not enough yet. This should change when the technology and its security allow us to go further. For example, the HCE payment method, based on NFC technology, dematerializes the card. Furthermore, it allows a strong authentication of the user and his dematerialized card. This should also help increase the adoption of NFC.
How does our HPE solution help solve these issues?
Our HPE solution covers two main issues.
The first is the barrier to equip for merchants. Mobile Acceptance requires a mobile payment terminal. Since HCE dematerializes the payment card, the next logical step is to dematerialize the terminal and this is what we offer with HPE. Mobile Acceptance with HPE only requires the download of the dedicated merchant app on Google Play or the App Store. Since there is no longer a need for a physical NFC terminal, the barrier has been lifted.
The second is mobility. To get rid of the terminal means increasing mobility and its use cases. As of today, the smartphone equipment rate is quite high and continues to grow. Any and all consumers have or will have a smartphone and merchants too. And, with the arrival of Apple and Samsung in this market, this method will impose itself. Our solution will allow consumers to safely pay anywhere with a simple tap of their smartphone.
HPE just won a PayForum Award, what benefits do you expect from this?
In my opinion, the industrial development of our solution is what is most important. Additionally, I am looking forward to many pilot projects which will lead to the solution being ready for production in the next few months.
We were talking about the dematerialization of payment cards earlier, what do you think about the arrival of industry giants like Apple and Samsung in this market?
This proves the potential of NFC and of the dematerialized payment card. This new payment method should become more popular especially with the contribution of the younger generations. It is very encouraging and proves that things are changing, and we can predict the arrival of other entrants in this market in the next few months.
Thank you for your time today, Jérôme. I will leave you with one final question: we live in a hyper connected digital world and, suddenly, you find yourself stranded on a desert island, which electronic product do you have to have with you?
Any product on which I can stock my dematerialized music and listen to it.