Editors note: This is the free edition of Payments Insider, a briefing on all things payments produced by BI Intelligence.
ADOPTION OF MOBILE PAYMENTS SLOWS IN THE U.S., PAYPAL STILL ON TOP: Growth in mobile payments adoption is tapering after a multi-year surge, a new IDC survey finds. Thirty-seven per cent of U.S. consumers reported using a mobile payment method of some kind, including both mobile commerce and consumer-side payments made in stores with mobile devices. But that represented only a “relatively modest gain” in consumer adoption over the prior year. The survey found that PayPal enjoyed the highest penetration among consumers. It was used by 58% of those who reported using mobile payment methods.
Achieving adoption beyond a core of early adopters is a challenge for any new technology. As we’ve written in past reports, for mobile payments to achieve higher penetration into the consumer base, services must be at least as convenient as cash and credit cards, i.e. they must reach what’s known as “convenience parity,” but they must also provide added services, like purchase-tracking or loyalty program integration that creates added incentives for consumers to part with old payment habits. “Providers need to offer products that add value beyond the payment,” says James Wester, IDC’s practice director for worldwide payment strategies. (IDC Financial Insights)
JP MORGAN CHASE WILL ENTER MOBILE WALLET MARKET: Despite signs of stalled progress in attracting consumers to mobile payments, JP Morgan Chase is forging ahead with its own mobile wallet, which is scheduled for release this year. Announced in February, the wallet will use tokenization technology — one-time codes that substitute for a user’s 16-digit card number to decrease fraud risk. Speaking at a media event last week, JP Morgan Chase’s Gavin Michael, head of digital for consumer and community banking, said the wallet will depend on near-field communication (NFC). An open question is how Chase’s app will be received by AT&T, Verizon, and T-Mobile. These three U.S. carriers jointly operate their own NFC-based mobile wallet, Isis. Currently, several Chase-issued credit cards are supported by Isis. But the three carriers have proved to be tough competitors in mobile payments, occasionally restricting customer access to competing products. (Bank Innovation)
VOTING OPENS FOR 2014 PAYMENTS POWER 10: Voting opened yesterday for the 2014 Payments Power 10, an annual ranking of the top ten individuals who have contributed significantly to the evolution of the global payments industry. Check out the nominees and cast your vote here. Winners will be announced at the PayExpo 2014 conference in June.
CARRIERS SEEK ROLE IN LONDON’S PUBLIC TRANSIT PAYMENTS SYSTEM: Mobile carriers EE and Vodafone are holding talks with Transport for London (TFL) to discuss plans to allow Londoners to pay for public transit tickets with their mobile phones. The plan would involve mobile carrier-owned apps which could be reloaded in a “pay as you go” scheme, according to the Financial Times. TFL’s terminals already accept NFC-based payments from contactless cards and could accept NFC-powered mobile phone payments after software upgrades. A deal for mobile-powered access to London’s transit system is significant because in other markets such as Japan, the use of mobile payments technology in the mass transit system spurred wider consumer adoption of the technology. (Financial Times)
GOOGLE WALLET NABS DOMINO’S: Google Wallet has scored a significant retail partner. Domino’s announced Monday that it would integrate Google’s mobile payment wallet into its Android ordering app, offering a “Pay With Google” button at checkout. The pizza giant estimates that its global digital sales reach $US3 billion annually. (Domino’s Pizza)
A STARTUP SEEKS TO REDUCE CHURN FOR STRIPE USERS. Though it has yet to launch, Churn Buster aims to help online businesses reduce churn rates caused by recurring payments systems that attempt to process payment cards with expired information. It looks like the company achieves this by both emailing and calling customers when their payments cards fail to be processed in order to get updated information. The company’s website singles out failed payments made on e-commerce sites using payment processor Stripe. (Churnbuster.io)
ORBITZ ADDS PAYPAL. In a tweet, PayPal President announced that he could now book flights on Orbitz using PayPal. (David Marcus via Twitter)
MASTERCARD BOARD NOMINATES FORMER FCC CHAIR, INT’L TRADE LAW EXPERT: MasterCard’s board of directors has nominated Julius Genachowski and Merit Janow for election to the board, with voting scheduled for the June 3 shareholder meeting. Genachowski served from 2009 to 2013 as chairman of the Federal Communications Commission. Janow served in senior trade policy roles at the U.S. Justice Department, the World Trade Organisation, and was the U.S. deputy assistant trade representative to China and Japan. (MasterCard)
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