It's been an up and down year for mobile payments. Mobile commerce continued to grow, while mobile POS sales plateaued. Consortia were formed and disbanded, and former enemies made nice and came together on new partnerships. P2P payments gained traction and developing companies released mobile payment apps.
All that plus ANT Financial taking over the world in the mobile payments year in review.
2016: The year mobile POS didn't happen
When 2016 rolled around, people were looking for an nice bump in mobile wallet transactions at the POS. Those hopes were quashed when Accenture released a report that mobile wallet POS transactions had seen
zero percent growth in 2016.
Black Friday telling of the gap between mobile payments and mobile commerce
We've written a lot about how mobile POS payments and commerce originating from a mobile phone are two separate things. When grouped together, reports make it seem like mobile POS payments are taking over.
2016's Black Friday showed us how different mobile payments and mobile commerce are right now.
Adobe estimated that shoppers made $1.2 billion in purchases from mobile devices on Black Friday. On the other hand, reports from payment processor Cayan revealed only 0.6% of all POS transactions of Black Friday were made using a mobile wallet.
AliPay
ANT Financial's payment arm continues to grow. AliPay is now looking to
service Chinese tourists all over the world, including payment capabilities at international duty free shops.
EMV transition happening slowly
Merchants have been slow to respond to new regulations requiring them to use EMV and chip technology for in-store transactions
. Fintech companies like Square and
CardFlight have created cheap and versatile solutions for merchants, but the process of moving over to new hardware has been arduous.
MCX goes down
The
Merchant Consumer Exchange was some of the biggest U.S. retailers' answer to high interchange fees. Merchants tried to circumvent credit card fees and third party mobile wallets like Apple Pay by creating a single mobile wallet that worked at various retailers.
Unfortunately for merchants, things didn't work out Some would argue that the MCX and its mobile payment app CurrentC was doomed from the start. Trying to have a single app cater to multiple conglomerates in various sectors is a near impossible task. There are those who feel the whole matter was a stunt to try and combat merchant exchange fees from credit card companies, but regardless, the app still hasn't been released and is seen as a big flop. Walmart, CVS, and Kohls are only a few of the companies that
left the MCX to create their own mobile apps.
PayPal, MasterCard, Visa ménage à trois
Paypal had been on credit card companies' naughty list because of its practice of pushing users to fund accounts via ACH versus using a credit card. But the three payment powerhouses kissed and made up earlier this year. The
new partnership gives PayPal a leg into POS transactions with new integrations into MasterPass and Visa Checkout. In exchange, PayPal agreed to not
discourage customers to fund their accounts with credit cards. I guess they forgot that Visa's CEO at the time Charles Scharf
called PayPal a "foe", pledging to go after them "in ways that people have never seen before".
Venmo grows, but sees increased competition
Venmo continued to grow this year, as more millennials signed up for the p2p payment provider. After seeing 25 percent growth from Q1 to Q2 of 2016, some predicted that Venmo will soon be the
bigger than any P2P payment service, banks included. But P2P payment growth means more competition. In November, Facebook launched a P2P payments feature in Messenger. With the amount of users that Facebook already has, the social media platform may be a daunting opponent for P2P payment providers.
Early Warning
Speaking of P2P payments,
Early Warning has been aggressively pushing its p2p payment system to banks. Rebranded as Zelle at Money 20/20, the app is the incumbents' answer to Venmo. Although monetization does look better at Zelle, the company still needs the buzz and higher customer acquisition numbers to truly compete with Venmo and Facebook.
Mobile wallet war: Apple vs Samsung vs Android
Though mobile wallet transactions at the POS haven't grown, that doesn't mean companies haven't started
jostling for position and market share. The big three of mobile wallets have been vying for early adopters, trying to position themselves for the day in the (not so near) future that mobile payments take off. Apple moved to mobile commerce to help assuage users, while malfunctioning Samsung phones put a damper on its market share and hopes.
India and developing countries emerging
India has emerged as a hotbed for mobile payments, with powerhouse Paytm at the lead. South American and African countries have also seen mobile payment growth as cheaper technology goes global.
Starbucks revamps rewards system
It's pretty tough to find a more successful mobile payment app than the Starbucks app. But the coffee company went against common sense and fixed something that wasn't broke, altering the rewards system. Although there was a huge backlash from consumers, people are still fans,
loading $1.2 billion onto the Starbucks mobile app and cards, which is more than many banks have in deposits.
Overall, there were some highs and lows this year for mobile payments. Though POS mobile transactions haven't done well, mobile commerce is on fire entering into 2017. It doesn't seem like any leaps will be made in mobile payments in the next 12 months, but look for continued momentum for mobile commerce, more P2P payment companies, and a global push to move transactions onto mobile devices.
