Commonwealth Bank’s Kaching
mobile payment app is already replacing wallets, but wider-scale use will depend on the cost to business of implementing systems to process the payments
Competition in the mobile payments field is gaining momentum, but while smartphone payment systems could cheapen processing for businesses, it will cost them to upgrade.
Companies developing these systems, such as London mobile payment company mPowa, are featured on the inaugural FinTech Top 50 list of software and services to financial services in Europe.
The list is a collaborative project by Bloomberg, Fox Williams, ICON Corporate Finance, Hotwire, and Silicon Valley Bank.
In Australia, eftpos is developing its own mobile widget that it says will be able to be used in digital wallets provided by banks and others.
Nicole Venter of retail consultancy Retail Oasis said the technology was rolling out and retailers would have to adjust their point of sale systems to be able to facilitate mobile phone payments.
“Retailers will have to consider completely changing what types of systems they are using,” she said.
Banks started working on micro-payment systems through PayPal or developing their own Commonwealth Bank’s Kaching mobile application a few years ago.
With smartphone developers now incorporating near field communication (NFC) on mobiles, retailers will need to start to put such systems into stores.
The technology takes pay wave ports – where consumers swipe their credit card in front of a terminal and currently used by Visa and Mastercard, further.
NFC allows shoppers to use a mobile phone instead of a credit card, while digital wallets can be used to store all your cards.
Mobiles will essentially become our credit cards and wallet, dispensing with the need for consumers to carry around cash, Venter says.
“At the moment point of sales systems can’t read a mobile phone screen. It will have implications for how retailers treat applications. We will see loyalty cards attached to credit cards on mobiles and new rewards and points for payment systems.”
There are also big changes in direct debit which has been quite expensive for businesses to provide, costing them $1 or $2 per transaction to credit card or payment-processing companies.
These back-end processes could be reduced to 10¢ through the use of applications and widgets.
Venter said this would have ramifications for how big data is used to understand consumers.
“It has security and privacy implications, but think about the data you’re tapping into if credit card companies are tracking your payments. Retailers can learn a lot about consumers’ behaviour.”