There’s yet another war going on for your money. No, it’s not the government trying to raise taxes. Again. It’s not greedy corporations like Apple adding more features to new products but keeping the prices the same. That’s not going to change.
It’s the mobile payments war, the battle between the credit card in your pocket and the option to buy something by using your smartphone or smartwatch. By now you’ve seen the names plastered all over the place. Apple Pay, Google Pay, Samsung Pay, and soon, Walmart Pay. Everyone has another way to move payments from plastic to your mobile device of choice and everyone involved wants you to stop using insecure credit cards and use more secure mobile transactions.
Therein lies the problem. Fragmentation. Plastic credit cards, secure with a chip or not, will not be going away any time soon. Growing rapidly is the mobile device payments segment which has taken off since Apple Pay was introduced and will grow exponentially the next few years.
While plastic and multiple cards are the preferred method of buying things for most humans in developed countries, mobile payments will make up only a part of future transactions, further fragmenting the buying and paying process.
Who will win?
It will not be Apple Pay. Fear not, it won’t be Google Pay, Samsung Pay, and certainly not Walmart Pay, though all will have a slice of the growing pie. Expect other retailers and their credit cards to have an impact in the fragmentation thanks to their smartphone and mobile device apps, many of which will be payment methods to rival Apple Pay and others.
Who will win?
The banks. What’s happening in the U.S. has happened in other developed countries around the world. Better security. Making a purchase using Apple Pay or whatever pay is more secure, so banks have less risk, which means less fraud, which means more money for the credit card issuing banks.
The banks win.
Credit card customers win, too, but in an odd way. With improved security and less fraud it’s possible that credit card rates will go down. I’m not holding my breath. Since one mobile payment system will not be a clear winner, it’s likely that the next few years will see customers trying to manage multiple cards and multiple payment systems from their smartphones.
In the past, all a credit card carrying customer had to do was stick a new card into wallet or purse. Today, each card needs to be setup in a smartphone account app, verified properly, and then used when making a purchase– assuming the merchant can handle the credit card you want to use at the moment.
See? Fragmentation. Mobile device payment methodology might be more secure, and the transaction easier to make, but the management of multiple cards on multiple apps with multiple payment methods has been offloaded to the customer while the banks get more security and lower costs.
Apple should just buy a bank.