Banks Need to Be In Mobile Payments…But How?

December 29, 2017         By: Steven Anderson

Thanks to the crashing success of Apple Pay, Samsung Pay, the variety of imitators therein and the various store-branded apps like Starbucks—which was so successful it actually hurt the company for a while—it’s become clear that customers want mobile payment systems. Banks can ill afford to ignore this development. The question that remains is how to proceed, an issue NCR recently took a look at.

Naturally, should a bank decide to build its own mobile payments app, it has complete control over the process. The branding, where it appears and at what size, what features it has, so on and so forth; all of these factors are at the bank’s immediate discretion and no one else’s.

However, a bank attempting to build its own mobile payments app quickly runs into the biggest problem therein: massive expense. Already, Chase has spent over $100 million in the development of Chase Pay, and it’s already had significant problems in terms of getting people to actually use it.

Taking advantage of other apps currently on the market, meanwhile, limits choice but also cuts investment; putting an app that’s already available into play costs vastly less, but the features are limited. Plus, there’s somewhat greater difficulty in trying to convince people to move from their current mobile payment platform of choice to the other.

While there’s clear advantage to having a mobile payments platform in place, it may be too late to just jump on someone else’s bandwagon. Choice is important to customers, and pulling in someone else’s payment structure may not be sufficient choice, especially in a market where that payment structure is readily available as it is. A completely new app can provide new options and make a case for itself competitively, but then, that choice can cost big money.

So in the end, banks are left with the less-than-palatable choice of jumping on the bandwagon and being just another entry in the field or blowing huge amounts of cash they may not even have to produce a unique application that customers may not even bother with. The low-cost choice may prove to be the ultimate winner here, so seeing more banks come out with Apple Pay-branded options could be in the future.