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Swiping Trumps Tap-and-Pay in Building Mobile Commerce Trust

Posted by admin on 1/14/14 10:00 PM
Topics: college retail, retail technology, mobile POS, eCommerce

The following excerpt is from an article written by Lauren Johnson, associate reporter, and published on Mobile Commerce Daily. Read her full article to explore the future of Mobile POS payments further.

Despite the expected growth in contactless payments, swiping a credit card through a mobile point-of-sale system will remain the dominant way merchants process mobile transactions in 2014.

Swiping a credit card through mobile POS hardware or tapping a mobile device against a contactless terminal have long been the two main ways that marketers are tackling in-store mobile payments. Although tap-and-pay technology ultimately promises a quicker experience, security issues, consumer habits and the lack of near-field communication support will keep tap-and-pay payments on the backburner this year.

Stuck on mobile payments
Both swiping and tap-and-pay are fairly easy motions to make and therefore do not dictate how consumers choose to pay. However, the main hold-up with tap-and-pay so far is the technology’s reliance on NFC. The number of NFC-enabled mobile devices on the market is still a small percentage of overall devices, which directly correlates to the lack of marketing initiatives that leverage the technology.

Take Google Wallet, for example. Google originally made a big bet on tap-and-pay and NFC with the introduction of Google Wallet in 2011 that let consumers pay by linking a credit card to a mobile app. Google Wallet also gleaned some initial interest from brands including Macy’s, Walgreens and The Gap. However, when NFC did not grow as quickly as some expected, Google responded by rolling out a physical card component to the program in November. The branded debit card is funded the exact same way as the NFC payment and indicates that Google may be having a hard time selling tap-and-pay to both merchants and consumers.

Additionally, perceived security problems are likely partly to blame for the hold-up with tap-and-pay payments.

Regardless of how much mobile payments scale or the security behind the technology, physically swiping a credit card brings up stronger trust feelings than consumers tapping their mobile device against a contactless terminal. Because consumers are familiar with swiping a credit card, tap-and-pay solutions will need to provide a tangible benefit in order to encourage a change in behavior.

Plus, swiping is likely to continue to be favored by smaller merchants because they can integrate the technology behind it into existent point-of-sale systems without much of a hassle.

“Mobile POS has been the bigger deal in the past — in 2012, 2013 it was definitely the bigger deal [than tap-and-pay], and I believe it will continue to be so moving forward into 2014 whereas a wallet is going to take more time to develop,” Rick Oglesby, senior analyst at Aite Group, Boston. said.

“One of the main reasons for that is just that consumer behavior takes quite a bit of time to evolve, and there’s been a variety of different mobile wallets that have tried to change consumer behavior with no resounding success yet,” he added.

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