2015 has been the breakthrough year for consumer mobile payments at physical stores. Beyond the current hype, there is still plenty of debate about whether mobile proximity payment will be successful moving forward. This new consumer value has roots in both the payments and mobile ecosystems and yet is something wholly new – an idea that both ecosystems are grappling to understand. In this blog, I will expand on why the mobile ecosystem finally has gotten its act together in support of mobile payments. After all, cards are the hottest new content category on mobile.
The smartphone industry is already very familiar with the criticality of user content on their sales: consumers buy mobile devices that support their preferred content. Blackberry’s entire value proposition was based on their exclusivity to corporate email. Apple moved toward phones partly as a defensive play to protect iTunes/iPod as music content migrated to mobile.
Windows and Blackberry OS struggle to keep consumers because of their lack of meaningful app content. Supporting the content expectations of consumers is a life or death decision for smartphone OS and device vendors. Similarly, cards have now been caught up in this content rip current that drives billions of dollars in mobile device sales.
Two factors will determine who ‘wins’ as cards migrate to mobile: bringing as many card portfolios as possible to mobile, and making cards very useful on mobile. Card portfolios have to be meaningful to consumers, and the more ways to use cards on mobile, the better.
Apple’s clever partnership with MasterCard, Visa, American Express, and Discover eventually brings with it the card portfolios of thousands of worldwide banks. However, the challenge with cards-as-content is that they tend to be only locally relevant. Canadian bankcards are not meaningful to Brazilian consumers, and vice versa. Keeping card content meaningful to the consumer requires a long, sustained effort to bring the world’s bank-issued, government-issued and merchant-issued card portfolios to the world’s mobile device users.
Making cards usable and useful on mobile devices has had its own challenges. Where are the NFC phones? Where are merchant’s NFC readers? Again, Apple leveraged another use case, in-app payments, to help drive early adoption of mobile payments. NFC payments will have a much faster ramp-up in the UK as both merchants and consumers are already familiar with tap-and-pay. While the rest of the mobile ecosystem plays catch-up to Apple’s v1.0, Apple is pressing ahead with innovative new use cases to ensure that the cards on consumers’ iPhones are useful.
The more that consumers use cards-as-content on their mobile devices, the more crucial it becomes for that content to be available for their next mobile device purchase. How many frequent flyers would give up mobile boarding passes only to purchase the next hot phone that doesn’t happen to support that functionality? Missing or ignoring customer expectations in fast-moving product categories can kill products, brands, and even companies.
The life or death nature of content on mobile devices has come to cards. Make sure your commitment level matches that of the smartphone OEMs.