Google, Apple, Samsung: Will Mobile Payment Make a Decisive Breakthrough in 2015?

16 March 2015

The race for market dominance in the mobile payment sector is expected to intensify in 2015. Apple introduced the new mobile payment service, Apple Pay, last year. Samsung catches up with its new Galaxy S6.  In May, Google will announce a new strategy for its Google Wallet payment solution.
 
Will 2015 become the year of mobile payment? Sasche Breite, Head Future Payments at SIX Payment Services takes a reality check.
 
Mobile payment is a major topic for merchants in 2015. According to the latest BITKOM figures, less than one third of all smartphone users would like to pay with their mobile phone in stores, and only 7% would like to do so in restaurants and cafes. Notwithstanding these figures, Dr. Bernhard Rohleder, Managing Director of BITKOM, remains  convinced: “Mobile payments will completely replace the traditional wallet in the future”. In his view,, the low figures simply reflect a lack of acceptance points for cashless, mobile payments.
 
Smartphone manufacturers will dominate the market
Which payment method will replace our cash and plastic money then? A survey conducted by SIX Payment Services in February 2015 amongst 199 visitors of EUROCIS,the leading trade fair for retail technology,showed: 50%of merchants see NFC as the technological successor of cash, mainly in the form of contactless card payments (46%) and app payments (24%). Only 13% of respondents consider the peer-to-peer e-mail payment system, experimentally introduced by Google, as promising. Merchants are more inclined to  believe in the success of new, not yet known, services (19%).
43% of respondents think that smartphone manufacturers like Apple and Samsung will define the future of mobile payment. Software giants like Google will lose the battle, according to 75% of those questioned.
 
Mobile payment not successful so far in the USA
Google has been experimenting with alternative payment methods since 2006, at that time under the name of Checkout. In 2011 the Google Wallet was introduced, without much success to date. In May 2013, the company planned to integrate a payment solution into its e-mail service Gmail, but failed to convince on the market.
Recently, Google announced that it would acquire the mobile software service Softcard and bundle strengths with major US mobile providers. Negotiations with VISA and Mastercard did not prove successful, according to the Wall Street Journal. Google really seems to struggle to get things moving in the right direction. In May, however, the company will present its new Google Wallet strategy at the I/O internal developer conference.
 
Apple boycotted; Samsung relies on mature technology
Apple joined the mobile payment bandwagon three years after Google, by presenting Apple Pay to the market in September 2014. The most successful mobile payment approach so far: Apple could already convince quite a few companies, banks and credit card providers to cooperate. A conglomerate of American chain stores, however, decided to boycott Apple with Walmart, Kmart, BestBuy and 7-Eleven keen to promote their own payment solution - CurrentC.
Another major player, Samsung, then decided to also step in to the market. With its Galaxy S6, the Korean manufacturer aims to surpass Apple. Unlike other payment solutions, Samsung not only supports NFC, but also magnetic stripes. Recently, Samsung acquired the payment provider LoopPay, which is said to offer solutions to 10 million merchants. Thanks to its mature magnetic stripe technology, Samsung Pay can be accepted by 90 percent of all merchants, according to LoopPay. To begin with, Samsung plans to introduce its payment solution  in the USA and  South Korea only.
 
Traditional wallet not yet obsolete
None of the main players on the smartphone and software market has yet been able to impose its mobile payment technology. Samsung could be successful, but this excludes Europe for the moment. In Germany, merchants still consider security a major hurdle, as indicated by 54% of respondents in the EUROCIS survey. One third (33%) mention the lack of mobile payment options in shops as a hurdle  on development. If 2015 is to become the year of mobile payment, then most probably this will not be  in Europe. Trust in new technologies and cooperation amongst players in the market have to be established first. Until then, we recommend to hold on to your traditional wallet for a while.