Are Apple Pay-Style Mobile Payments Doomed?
For a while, mobile payments were largely run by original equipment manufacturer (OEM) mobile payment systems, which is to say, payment systems that came with a mobile device. This included such things as Apple Pay, Google Pay, and Samsung Pay, and for a while, they were really the only game in town. That’s changing, according to a new Juniper Research report, which suggests that contactless cards are actually surging ahead and may ultimately render OEM mobile payments out in the cold.
The Juniper Research report notes that just 14 percent of US consumers are currently turning to OEM services, and contactless credit and debit cards are both moving to take OEM’s place. Banks like JP Morgan Chase, among others, have been bringing their own offers to the table and customers are taking advantage.
Word from report author James Moar suggests that OEM payments aren’t likely to completely die off, even with widespread adoption of contactless cards. Even in the UK, where mobile payments are significantly more advanced, growth is still found in the OEM market. Since virtually none of the UK respondents in the study turned to OEM payments alone, it was a safe bet that there would be at least some double-dipping going on.
This is actually reasonable; after all, we’ve already seen how OEM payments can be useful in specific situations. OEM payments will likely become a backup tool, the kind of thing that’s always on hand as long as your phone is. Phone-based mobile payments certainly won’t go out of style; just look at the success Starbucks has had. While some might stop using such applications as they’ll tire of switching between their phone and their contactless card for a limited number of events, the connections to rewards programs will certainly help. That and Starbucks might well welcome just a little less mobile business considering how they’ve had enough to slow the regular flow of operations.
Still, what we see here is that the mobile payments market is, once again, changing. As a young market, we should expect this sort of thing, though I doubt anyone saw “Apple Pay’s market share threatened” as a possible outcome.