Introduction
The market of mobile wallet transactions has abruptly emerged over the recent years and it appears to have been proving its value being able to bring advantages to banks, retail shops, and other merchants which make use of this payment method. Chief Executive Officers of prominent and recognized United States Banks reveal their interests in joining the market of mobile wallets because for them additional revenue and customers’ loyalty are at stake. In particular, this was publicly admitted by Richard Davis, head of U.S. Bank, during an online meeting with financial experts (PYMNTS.com, 2014).
Moreover, retail shops claim they see another benefits from mobile wallets: British supermarket called “Sainsbury” has successfully launched a complex mobile payment application through which its clients may not only pay for the purchases in the store, but also scan the products to see any special offers and discounts and find out how much they will pay at the cashier desk (Mobile Marketing Association, n.d.). Sainsbury’s representatives confess to having a great opportunity now to keep track of customers’ preferences.
Experts of the mobile wallet payment systems have traditionally defined major competitors offering their services to people and commercial entities. This enumeration encompasses “Apple Pay”, “Samsung Pay”, “Android Pay”, “Current C” (purchased by PayPal), and “PayPal Wallet” (Annamalai, 2015; Wolpin, 2015). Within the sections above, the author will explore the main features of, advantages, and entrapments posed by the aforementioned mobile wallets.
Key Players Driving Mobile Wallet Market and
Their Advantages and Disadvantages
“Apple Pay” Mobile Wallet
The present mobile platform works on the gadgets (cell phones) recently manufactured by Apple company and here there is some obstacle to be highlighted: the wallet program interacts only with the models of “iPhone 6” or with the models of “iPhone 5”. However, in the latter instance, “Apple Watch” is needed to effect the transaction. The number of financial organizations and retail shops accepting “Apple Pay” mobile wallet is actually deep: more than 2,000 banks and a few hundreds of retail shops among which are Bank of America, American Express, Panera Bread, Whole Foods etc. (Wolpin, 2015).
Despite the assignment of special security codes issued to authorize and confirm the transaction, this mobile payment platform has witnessed a substantial percentage (specifically, it accounts for 80%) of occurrences leading to an unauthorized usage of cards’ data to effect purchases in retail shops. In addition, the quantity of payment terminals which “Apple Pay” wallet is compatible with (the so-called “NFC terminals”), accounts only for a few percent of all the terminals and they are more expensive than the usual ones. And one more entrapment experienced by this mobile wallet is that it is not supported by three well-known retail shops comprising Best Buy, Walmart, and Target (Wolpin, 2015).
Since many people in America have Apple cell phones, introducing “Apple Pay” mobile wallet into automatic cash dispensers run by banks and other providers of financial services is obviously justified. In particular, according to one source, such institutions as Wells Fargo and Bank of America are supposed to be developing the applications which would allow consumers to carry out transactions through their cash dispensers without having bank cards (Constine, 2016). Though the given mass medium states that representatives of both companies have not publicly exposed which categories of mobile wallets will be introduced, but the inclusion of “Apple Pay” turns out to be apparent.
“Samsung Pay” Mobile Wallet
The mobile wallet developed and launched by Samsung firm may be characterized by an apparently identical method of operation: a customer downloads a relevant mobile wallet program which is then installed into a cell phone, enters his card data and may use it in different stores. However, “Samsung” mobile wallet possesses a valuable feature and option differing from those of “Apple Pay”, for instance. Specialists in this industry claim that “Samsung” wallet proves to have a broader coverage due to being supported by “LoopPay” program which enables purchases through “Samsung” cell phone (Wolpin, 2015).
The most valuable benefit of “LoopPay” application accounts for its capability of interacting with usual “magnetic-stripe” terminals which effect purchases via usual bank cards. Therefore, customers of “Samsung” mobile wallet have the possibility to go shopping to millions of retail shops located in different countries. However, “Samsung” mobile wallet shopping has been available since September this year in such countries as United States and South Korea. Apart from this, the number of banks and other financial organizations partnering with “Samsung” mobile wallet includes American Express, JPMorgan Chase, Visa, MasterCard and others. By the way, “Samsung” mobile wallet is mandatorily tied only to the recent editions of this company’s cell phone models (Wolpin, 2015).
“Android Pay” Mobile Wallet
The third flagship service offering mobile wallet program is represented by “Android Pay”. Basically, the system works under similar principles and rules as “Apple Pay” and “Samsung Pay”, but it has other distinguished benefits in comparison with former two providers. Frist of all, it should be noted that “Android Pay” program is not tied to any specific brand of cell phone, say, Samsung or Apple. An actual number of smartphones working on Android system cannot be determined, there are plenty of them: Alcatel, LG, Nokia, Xiaomi, HTC, Nexus etc. Additionally, customers of “Android Pay” also may make purchases using the details of their bank accounts in spite of entering data of their banking cards. The list of commercial services providers and retail shops conducting transactions through “Android Pay” is spectacular: Coca-Cola, Whole Foods, Uber, Groupon, Best Buy and many more (Wolpin, 2015).
“CurrentC” Mobile Wallet
The given mobile application has been developed by the group of retail shops and other commercial providers (including petrol stations) and this fact constitutes its differing advantages and peculiarities marking “CurrentC” out from above mentioned mobile wallets. “CurrentC” does not function under the rules of any financial organization. It uses a customer’s account with any commercial provider and also may apply customer’s discounts, membership programs as additional bonuses to reduce a total amount to be paid by the client (Wolpin, 2015).
According to the source, the given mobile wallet is compatible with a particular “code reader” not specified as “NFC terminal”. “CurrentC” program may be installed into cell phones supporting Android or iOS (Wolpin, 2015). However, what is also worth considering while switching to this mobile platform: the group of commercial providers having set up “CurrentC” lay down exclusive rules of usage (only “CurrentC” platform should be used by them). Nevertheless, “CurrentC” apparently has a considerable disadvantage relating to its territory of coverage (the payment platform was firstly launched in Ohio as an experiment) (Wolpin, 2015).
“PayPal” Mobile Platform
Apart from its recognized leading position in the industry of online payment platforms, PayPay has yet to conquer its position on the market of mobile wallets. PayPal is extensively known for providing its customers a possibility to add their bank cards to this payment system, and also receive and send payments across the countries whose authorities allow PayPal (Annamalai, 2015; Research and Markets, 2016). The fact is that despite having a strong security system and multiple checks (it also encompasses photo taking) to disable fraudulent activities, PayPal still has not developed and launched an effective mobile wallet attracting millions of customers.
In the recent months, the corporation has claimed that it acquired Paydiant and its pilot projects which enabled and breathed life into the aforementioned “CurrentC” mobile wallet (Kastrenakes, 2015). Retail shops gladly accept PayPal’s intentions of entering a mobile wallet market since commercial providers expect to see an evolvement of a serious competitor to “Apple Pay” and “Samsung Pay”. On the wave of these events, PayPal has also announced that it has already developed and tested a new program featured to read account details of the customers saved in their cell phones (Kastrenakes, 2015).
In addition, during 2016 “Mobile World Congress”, PayPal’s official representatives revealed the information on the company’s ongoing partnership relationships with Vodafone, which are aimed at creating the platform for mobile payments (Research and Markets, 2016). All these actions prove that PayPal is on the brink of competing with such serious rivals as Visa and MasterCard. Spanish clients are reported to have the first experience of making purchases in the local retail shops and restaurants via this application (Research and Markets, 2016).
Conclusion
In summary, the introduction of mobile wallet into their payment system poses certain benefits to financial organizations, retail shops, and other commercial providers. First of all, they apparently gain a possibility to monitor clients’ choices and preferences (given that modern life cannot be imagined without having a cell phone) by receiving an opportunity to increase their revenues and thus net profits. A percentage of estimated revenue increase is not publicly revealed by banks and retail shops. Evidently, it happens owing to confidentiality reasons.
However, a success of the mobile payment market participant will certainly depend on many factors underlined above. As it has been stated, there are mobile wallets which are mandatorily tied to certain models of cell phones (Apple, Samsung) and this may constitute an entrapment for a commercial provider which, say, supports only “Android Pay” mobile wallet. Due to this, commercial providers (whether banks, retail shops, or other payments services) firstly assess the number of potential customers using this or that mobile wallet, estimate projected costs related with a particular mobile wallet launching to determine prospective advantages for the organization.
References
Annamalai, D. (2015, March 10). Battle for mobile payments: Guide to digital wallets. Retrieved from http://thefinancialbrand.com/50720/mobile-payments-digital-wallet-analysis/
Constine, J. (2016, January 28). Apple Pay is coming to ATM’s from Bank of America and Wells Fargo. Retrieved from http://techcrunch.com/2016/01/28/apple-pay-atm/
Kastrenakes, J. (2015, March 2). PayPal is buying mobile wallet maker Paydiant to take on Apple Pay. Retrieved from http://www.theverge.com/2015/3/2/8135001/paypal-buying-paydiant-mobile-wallet
Mobile Marketing Association. (n.d.). Mobile: The relationship channel. Retrieved from http://www.mmaglobal.com/files/whitepapers/mobile-the-relationship-channel.pdf
PYMNTS.com. (2014, July 18). Why U.S. Bank is banking on mobile payments to drive revenues. Retrieved from http://www.pymnts.com/in-depth/2014/why-u-s-bank-is-banking-on-mobile-payments-to-drive-revenues/
Research and Markets. (2016, February 22). PayPal announce NFC upgrade, mobile wallet partnership with Vodafone. Retrieved from http://www.prnewswire.com/news-releases/research-and-markets-paypal-announce-nfc-upgrade-mobile-wallet-partnership-with-vodafone-569637191.html
Wolpin, S. (2015, October 19). Mobile wallets: Apple Pay v. Samsung Pay v. Android Pay. Retrieved from http://www.tomsguide.com/us/mobile-wallet-guide,news-20666.html
