SIM-based mobile wallets seem to have reached an evolutionary deadend, but a new generation of solutions should alter the local mobile payment landscape for good.
According to the Financial Times, more payments are made in China via mobile devices than by bank cards. One mobile payment provider, Ant Financial handles more transactions alone than the state-owned bank card provider, Unionpay. This presents banks with something of a headache, to say the least, because of their falling revenues: in 2015 losses amounted to USD 20 billion due to the mass migration of payments to mobile platforms. Another problem is that banks are losing sight of their customers: there is less data available to them that would allow them to keep track of spending habits, which in turn makes it harder to offer tailor-made products and services.
Similar trends are prevailing in Europe. According to a recent Digital Payments survey by Visa, the number of those making payments via a portable device has tripled in the past few years. Some 54% of respondents claimed they would use their mobile gadget to settle bills, whilst that ratio was just 18% one year earlier. In Hungary, online banking functions have quickly found their way to the mobile world. “An online presence by itself will not do. In order to fulfil the needs of customers efficiently, services available via mobile must operate on a uniform platform,” Gábor Rajnai, director of sales at K&H Bank says.
That said, the idea of the mobile wallet seems to have hit something of a brick wall around here. Magyar Telekom, which pioneered it back in 2014, has announced that its Mobile Wallet service will cease to exist as of April 1; Vodafone withdrew from the project as of February 1.
Ákos Gáborjáni Szabó, CTO of Gránit Bank, says he was not caught by surprise by this turn of events. “You needed a bank, a card company and a mobile provider in order to make it work. Having so many players involved in one transaction made the whole thing very complicated and customer experience suffered as a consequence,” he says. Users also needed an Android handset that was NFC-compatible and they received a special SIM card, which together with a connected app, enabled payment.
But it is not all gloom. For one, Magyar Telekom is planning to introduce a new payment application in lieu of its mobile wallet sometime this year. And banks that have only recently launched their mobile payment projects will also use a new generation of solutions.
The arrival in Hungary of Apple Pay is very much overdue too after it has made its debut elsewhere in Europe, and that should trigger further growth of the mobile payment sector. Samsung Pay and Android Pay will presumably pop up soon as well. And other experiments may give another hint about what comes next. Take Vodafone’s agreement with PayPal, according to which PayPal accounts can be directly debited in the United Kingdom and Spain in the course of mobile payment transactions.