Proximity payments inches closer to mass market

London - 3 March 2015

“Wait and see” approach to technology will leave some telecoms, merchants and payment providers behind in 2015

As infrastructure for mobile proximity payments grows across all regions (including smartphone and contactless infrastructure), and a high appetite for investment in mobile proximity payments from banks and retailers, now is the time to formulate and execute on payment roadmaps according to new research* from Ovum, the global analyst house. As a result, the market is now ready for a period of sustained growth in terms of products and platforms going live in the market.

Driven by host-card emulation (HCE) and Apple Pay, prospective wallet providers and merchants are now rushing to solidify their payments roadmaps and bring services to market. With no clear winner in the mobile proximity space, there is great potential and opportunity, especially from tokenisation and HCE services that have the potential to create real innovation by making it easier and safer to launch new services.

Kieran Hines, Practice Leader, Ovum Financial Services comments: “The mobile proximity space has the potential to break the four-corner payments model and bring genuine innovation. Expect incumbent players to fight back fiercely to prevent this happening. For virtually all the players in the space however, there is finally the much-promised opportunity on the horizon with the seemingly endless bank-led trials hopefully reaching a close.”

Kieran continued “Careful navigation will still be necessary as new payment standards continue to be developed and innovation will begin to flourish – however those that invest early and wisely will reap significant rewards in the not too long term. We’ve launched our new Payments research channel this month to help our clients navigate this complex, changing and exciting space.”

Challenges and roadblocks remain – business models and revenue drivers will need to be examined, alongside growing competition and the potential for regulatory intervention down the line. Although NFC is resurgent, other authentication methods continue to be developed, fuelling a cautious, fickle approach in the payments market.

Regardless, Ovum believes the mobile payments space is now in a better position to achieve mass-market success than it has ever been.

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