INSIGHT: Proximity payments inching closer to mass market

A “wait and see” approach to technology will leave some telecoms, merchants and payment providers behind in 2015.

A “wait and see” approach to technology will leave some telecoms, merchants and payment providers behind in 2015.

That’s the view of Kieran Hines, Practice Leader, Ovum Financial Services, who believes the market is now ready for a period of sustained growth in terms of products and platforms going live in the market.

Why?

“Because as infrastructure for mobile proximity payments grows across all regions (including smartphone and contactless infrastructure), and a high appetite for investment in mobile proximity payments from banks and retailers, now is the time to formulate and execute on payment roadmaps.”

Driven by host-card emulation (HCE) and Apple Pay, Hines says prospective wallet providers and merchants are now “rushing to solidify” their payments roadmaps and bring services to market.

With no clear winner in the mobile proximity space, the analyst firm believes there is “great potential and opportunity”, especially from tokenization and HCE services that have the potential to create real innovation by making it easier and safer to launch new services.

“The mobile proximity space has the potential to break the four-corner payments model and bring genuine innovation,” Hines adds.

“Expect incumbent players to fight back fiercely to prevent this happening. For virtually all the players in the space however, there is finally the much-promised opportunity on the horizon with the seemingly endless bank-led trials hopefully reaching a close.”

For Hines, careful navigation will still be necessary as new payment standards continue to be developed and innovation will begin to flourish – however those that invest early and wisely will reap significant rewards in the not too long term.

“Challenges and roadblocks remain,” Hines adds, “business models and revenue drivers will need to be examined, alongside growing competition and the potential for regulatory intervention down the line.

“Although NFC is resurgent, other authentication methods continue to be developed, fuelling a cautious, fickle approach in the payments market.”

Regardless, Hines believes the mobile payments space is now in a better position to achieve mass-market success than it has ever been.

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