CI First Look – The Evolving Mobile Payments Landscape

by on Jun 27, 2012

Introduced in May 2011, Google Wallet instantly became a focus for the hype around mobile payments. The app was one of the first serious efforts to have a phone enabled with near-field communication (NFC) technology replace a physical credit card at the point of sale.

A year later, though, Google Wallet has struggled to gain widespread traction due to a lack of NFC-enabled phones, minimal network infrastructure and an absence of merchants that accept Google Wallet outside of major cities. In the meantime, PayPal and Apple have developed new products and partnerships that could take mobile payments in very different directions.

PayPal Expands its Partnerships
On February 28th, PayPal began allowing their users to complete point-of-sale transactions at many Home Depot locations. Once they have activated the Store Checkout feature on the PayPal site, customers can pay at compatible in-store terminals by entering their phone number and PIN. Since then, PayPal has announced that point-of-sale transactions will also be possible at fifteen other major retail locations including Advance Auto Parts, Barnes & Noble, JC Penney, and Office Depot.

Coupled with their PayPal Here app, which allows small businesses to accept PayPal or have customers swipe their credit card through a triangular dongle attachment, PayPal has been a leading innovator in the mobile payments field.

Apple’s New Mobile Payments System
More recently, Apple has developed its own mobile solution. Announced earlier this month, iOS 6 will include Passbook, an app which would allow users to store their event tickets, boarding passes, store cards, coupons and more on their iPhone. What sets this app apart is its geo-location awareness. For example, when you walk into a movie theater, the movie tickets you purchased with the Fandango app will automatically pop up on your phone. 

While Passbook isn’t a replacement for your credit card at the point of sale, it will allow for prior purchases to be redeemed using an iPhone. When checking out, a barcode or an NFC code that represents the transaction will appears on the device’s screen. This allows the cashier to scan the code and confirm that the purchase was made.

Closing Thoughts
While these solutions present great alternatives, by no means are NFC solutions going by the wayside. Other companies still believe that NFC technology will replace physical wallets. Microsoft just announced the Windows 8 phone will come with an NFC chip and be compatible with Google Wallet. In addition, the highly anticipated ISIS app, already contracted through Verizon, AT&T, and T-Mobile, is rumored to be in talks with Sprint (currently an exclusive carrier of Google Wallet). 

Nonetheless, there is still no clear leader in the mobile payment field, or even a clear consensus as to the right technological approach.  Perhaps over the next year a front runner will emerge, but until then, the race to become THE mobile payment solution is wide open.