Convincing consumers to adopt mobile payments remains “a challenge”, according to MasterCard product VP, Mike Cowen, despite continued hype around the space. Although MasterCard has already rolled out its PayPass technology for NFC-enabled smartphones and credit cards to more than 92 million customers globally, Cowen tells StrategyEye that “there is still a lot of work to be done” before the technology becomes mainstream.
“It’s a behavioural change issue,” he says. “There’s very much fear of the new. We faced a similar challenge with internet banking. There is a huge amount of work to be done to reassure people, but we believe contactless payments may be as important as internet banks have become.”
Despite lofty forecasts that mobile payments will power a USD74 billion market by 2014, fraud and security fears remain a huge barrier to adoption. Cowen says national big-name brands are likely to play a central role in winning consumer trust over the coming year. Coffee shop chain Starbucks is proving itself to be one of the most successful early adopters of the relatively young NFC payments technology. The firm claims that it has processed 26 million mobile payments since launching its Mobile Pay system in the US last year to let customers pay for goods using smartphones.
Although consumer adoption remains low, the infrastructure for mobile payments is already in place for payments firms such as MasterCard, claims Cowen, with MasterCard’s PayPass point-of-sale terminals now available in 42,000 merchant locations in 37 countries. To boost adoption however, partnerships will prove crucial for MasterCard, as it attempts to increase the penetration of its PayPass technology around the globe. The firm was one of the first to sign up as a partner to the carrier mobile payments venture ISIS, due for launch later this year, and has also partnered with Google Wallet.
“We used to announce numbers of PayPass cards, we don’t need to do that anymore,” says Cowen. “Nobody could interpret this to be an experiment or a trial – this is full scale roll out and the individual numbers cease to be of importance.”
Ownership of NFC-enabled mobile phones and consumer trust will now be the chief barriers to mainstream uptake. This may be set to shift, with Nokia’s recent launch of an NFC-enabled Lumia smartphone, and rumours that Apple is planning to integrate the technology into its next generation iPhone. Meanwhile, global sales of smartphones that include NFC technology are now forecast to hit 100 million this year, according to Berg Insight, as manufacturers bring more devices to market.
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