Over the past decade the promise of mobile payments has yet to be realized. To date, the various attempts have failed due to a patchwork of different providers attempting to set the standard, inconsistent support and buggy technologies. Meanwhile, the United States has experienced a period of record setting growth in fraud due to a series of data breaches at major financial and retail institutions. The issue is so severe that a recent White House executive order is directing the country to adopt “Chip and Pin” EMV card technology.
It appears that industry has some ideas already up their sleeve. This past October, Apple launched their latest iPhone. With numerous innovations, the iPhone 6 will feature a wireless payment platform dubbed “Apple Pay”. Apple has taken a strong position by partnering with major financial institutions and inventing a new model for securing transactions leveraging innovative technologies like biometrics and wireless near field communications included in their newest devices. With iPhones in the hands of nearly 20% of American citizens it appears that the marketplace is starting to mature, but Apple hasn’t won the battle quiet yet.
A consortium of major retailers named the Merchant Customer Exchange (MCX) has launched a competitive platform called “CurrentC”. MCX’s alternative to Apple Pay takes a unique approach that leverages a cross platform mobile app which allows a customer to pay using a security pin and the camera on their device to scan a QR code provided by the retailers Point of Sale (POS) system. Offering reduced transaction fees and new customer loyalty features, CurrentC stands to be a formidable opponent to Apple Pay.
Critics of CurrentC are already calling the new approach “clunky” and accusing the retailers of manipulating Apple Pay support by disabling NFC sensors on in-store payment kiosks. MCX has publicly stated that the retailers can support whatever standards that they prefer, however their members are moving to CurrentC exclusively.
At this stage of the game, it appears that these two noteworthy players are the main event. However, there are a host of other disruptive smaller platforms with big corporate backing like Google Wallet, Paypal, Square, and Bitcoin based payments.
As these payment platforms become more widely accessible, it will be interesting to track adoption. Will we have a “Betamax vs. VHS” moment? OR will a heterogeneous ecosystem of payment options become the norm?
In either case, security must be a primary concern for an industry that needs to restore consumer confidence and identify new revenue streams. Mobile payment systems will certainly run against heavy scrutiny from security analysts. Can they prevent fraud and stay ahead of malware authors looking to capitalize on a new breed of technologies? or will they open up new doors for entry? Only time will tell.