Although Europeans are increasingly using mobile devices for payments, most payments are still made using the traditional e-commerce environment: the Internet browser.
However, a new report from IDC Financial Insights found that the future of mobile payments belongs to apps, which interact with smartphone hardware components to enable superior user experience.
With mobile payments potentially adding value to a number of vertical markets, several groups of players — including financial institutions, wallet providers, retailers, and mobile network operators — are trying to take advantage of in-app payments.
The report found that:
* Consumers do not have a strong desire to pay with mobile phones and not all will be motivated by rewards and convenience. They want to play games on their smartphones, access social networks, read news, and check emails — but consumers are perfectly happy to use cash and cards for payments.
* Given the investment going into contactless infrastructure across Europe, banks will gradually start offering host card emulation (HCE) based mobile payments through their own mobile banking applications.
* Retailers wishing to offer mobile payments as part of their own apps have no choice but to experiment with non-NFC technologies.
* SEPA tools and new domestic interbank arrangements will enable and spread mobile payments funded by bank accounts across Europe.
“This is a critical time for the mobile payments industry — the technological landscape in this space is finally well-defined for all relevant parties to enter this space. Before placing bets on one particular technology or approach to mobile payments, it is essential to understand its limitations and potential,” says Andrei Charniauski, research manager at IDC Financial Insights.
