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Whatever happened to mobile payments? How the iPhone 6 could kill the wallet

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Apple Mobile Payments: How the iPhone 6 could kill the wallet

What IS going on with mobile payments? Physical wallets were supposed to be obsolete by now. We were supposed to be paying for everything with a nonchalant swipe of our smartphones.

And yet here we are in 2014, pulling the same tired old plastic debit cards out of the same tatty leather pouches. This isn't the future we envisaged back in 2010.

We're being overly dramatic, of course. But the question is a valid one. Are we really any closer to that wallet-free future?

Yes. In fact, some of the major changes necessary to kickstart the widespread adoption of mobile payments are right around the corner.

Allow us to explain.

Mobile payments: here already

Mobile payments are already here. They're just not very widespread, and they're not particularly good.

Google tried its luck three years ago with Google Wallet, a payment system that worked with NFC technology incorporated into Android phones of the time. The company has ploughed hundreds of millions into it and struck deals with several major financial institutions, but it still hasn't taken off.

Indeed, Google Wallet NFC payments still aren't available outside of the US. It all just seems to have stalled for the big G.

Gwallet

Samsung has had a somewhat half-hearted stab at mobile payments by adding support for Visa's own payWave app to its NFC-equipped smartphones. It's not a stand-alone integrated system, though.

Nokia was the first smartphone manufacturer to launch an NFC-equipped phone some eight years ago, but it's still been unable to crack the mobile payment conundrum. Rather, it seems to have focused on NFC's facility to make Bluetooth pairing quick and easy with things like speaker docks and headsets.

Why haven't mobile payments taken off yet?

There are a number of reasons (and excuses) that have been offered up as to the failure of mobile payments to really take off.

The main one seems to be the expense involved for retailers. Put simply, a large proportion of shops do not have the NFC-scanning equipment in place to accept such mobile payments - and show little will to do so. With no immediate benefit, particularly for smaller retailers, it's easy to see why this has been the case.

This is particularly so in the American market, which poses its own distinct problem. It's the home of so many mobile payment innovators, and is invariably the first major market that most technical innovations of this kind must tackle if they're to take off.

Yet America has been extremely resistant to new, more advanced payment systems. Most places you go in the US, you still have to sign for credit card purchases.

Samsung NFC

Another thing that's hampered the take-off of mobile payments in the US market is the power and influence of the mobile network operators. In addition to NFC technology, network support is needed to facilitate secure mobile payments.

American networks - or 'carriers,' as they're called natively - combined to pretty much scupper Google (one of few companies in a position to get things rolling) and it's ambitions in the space. These operators opted not to support Google Wallet, instead choosing to adopt their own mobile payment system called ISIS.

Of course, all of this squabbling over multiple standards is in itself a factor in the lack of mobile payment progress.

Finally, there are concerns over the security of mobile payment systems. Consumers will need solid reassurance that their mobile phones and network connections are secure enough to be trusted with their bank details - and with numerous and ongoing tales of remote hacking and malware (particularly on Android), that confidence just hasn't come about.

Why mobile payments are about to take off

For one thing: Apple. The tech world has been anticipating Apple's adoption of NFC and launch of its own mobile payment system for several years now. Many feel that Apple's non-participation alone has been enough to stall the widespread adoption of mobile payments.

While we wouldn't go quite that far, there's little doubt that Apple's non-participation has been a major factor. Apple, with its hugely popular iPhone range, has an uncommonly strong say on such standards.

You might think that if simple market saturation was such a factor, then Google and Samsung's efforts would have seen greater success. But it's not simply down to the sheer number of iPhone and iOS users out there. Apple has a singularly strong and secure software ecosystem, and customers who are willing to spend good money through as well as on its devices.

It's been estimated that Apple has some 800 million credit cards stored on its system already - that's more than twice what Amazon and Paypal have combined. If it decides to implement an intuitive mobile payment system of its own, it would be a relatively small matter to switch a vast number of those users onto it.

And all reports suggest that Apple is indeed implementing such a system. In fact, the iPhone 6 will almost certainly be announced on September 9 with NFC support and Apple's own mobile payment system onboard. The company has reportedly reached agreements with Visa, Mastercard, and American Express to support such a system.

Touch ID

What's more, with Apple's proven Touch ID system on board, users will be able to use their own fingerprints to authorise payments - something that will be quick, easy, and most importantly secure.

The only potential hitch here is the carriers, but Apple has shown in the past that it's uniquely capable of bulldozing its way through such petty roadblocks.

Aside from Apple's involvement, the situation with US retailers is also looking up. Recent legislation has meant that American shops are having to upgrade their payment-handling equipment to accept the kind of chip and pin cards we in Europe have had for years.

Many of the latest payment systems of this kind will have NFC systems built in, meaning a significant portion of America is soon going to be mobile payment-ready. Much of Europe is already prepared, or will be soon.

Of course, the one remaining major factor in all of this is the consumers. Are we all ready for mobile payments? Do we even want to ditch our wallets and hand another part of our lives over to our smartphones? That's the one lingering question that even Apple can't be sure of the answer to.

Next, check out all the latest iPhone 6 rumours and news

Terrell Cooper

September 6, 2014, 4:58 pm

About time The less in my pocket the betta!

Person chap

September 6, 2014, 11:36 pm

The way privacy is going, I think we're in serious trouble if our whole life is in one device. Google used to say don't be evil. Now their policy is "unless it makes us money".

pimlicosound

September 7, 2014, 12:54 am

Unfortunately, the USA is still not adopting true Chip and PIN cards, but rather Chip and Signature cards. From the Wikipedia article (http://en.wikipedia.org/wiki/C...

"Some US banks are now issuing Chip and PIN cards for their more affluent, frequent-travel customers. However, even though these credit cards have chips on board, many are in factChip and Signature cards;[1] as they require verification with a signature instead of an encoded PIN. As a result, such cards will not work on standalone kiosks for Chip and PIN cards, and also have similar increased vulnerabilities to the traditional magnetic swipe cards."

TheConciseStatement

September 7, 2014, 3:33 am

Having looked forward to Apple's contribution to mobile payment technology finally breaking the deadlock in uptake, I have to say this could not come at a worse time for the fruit company. Part of the reason we were okay trusting them with our information was their record on security which has taken a huge blow in light of the iCloud story. I was thinking it might even be worth their while delaying any rollouts perhaps until the release of the 5-inch-plus iPhone - I know, hypotheticals upon hypotheticals - and then maybe the media dust will have settled and security tightened again. Because if people don't accept Apple's solution, I fear the technology is dead, dead, dead - a shame because anything that allows us to move faster and with less baggage in busy metropolises, with a single point of lockdown can only be a good thing.

William Swartzendruber

September 7, 2014, 6:34 am

Two things:

1. MasterCard and Visa have set the October 2015 deadline, not Congress.

2. Host Card Emulation has recently made Google Wallet much more accessible to everyone as carriers do not control it.

Jmac

September 8, 2014, 6:24 am

Why could the carriers be a roadblock? Apple would be running the payment infrastructure at the back end. May not even need a data connection.

PGrGr

September 8, 2014, 11:51 am

Another reason why NFC payment has been slow on the uptake:

In the US, which, as you say, is the largest and most influential market, NFC has had to compete with the likes of Square, PayPal Here etc. In the UK, PayM has just been launched. These are methods of transferring money which are either based on existing technology, or which do not not require a universal rollout of hardware readers.

That said, I think you are maybe overstating Apple's influence in this realm. Whilst I agree that Apple have a sway that goes way beyond their market share in terms of what phones look like etc, they do like to lock things down to their way of doing things. If they succumb to the temptation of creating a system which only iOS users can use, they are also going to alienate retailers etc, who will end up having to install a separate device just for i-users.

If ever there was a case for open standards, surely this is it.

Prem Desai

September 29, 2014, 3:45 pm

Apple is not going to kill the wallet - it's be the big finance companies i.e. Visa, Mastercard.

If anything, Apple will slow it down. That's because of their complete lack of understanding on how to test software properly - they have proven this time and again.

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