Editor’s Note: At Mobile World Congress 2015, MasterCard is participating in a discussion on the future of mobile to learn more about what’s next in digital commerce. We’re hosting a “What’s Next” in mobile series on our blog, inviting others to share perspectives.
Since its release last fall, Apple Pay has sparked a good deal of excitement in the payments space. Part of the appeal of Apple Pay boils down to the fact that it’s an Apple product. Apple inspires great loyalty, in large part because it so completely understands the importance of the user experience. With Apple Pay they have put those talents to good use in making a mobile payment experience that is seamless and safe.
While we don’t know how many people have actually signed up or used Apple Pay at this point, it’s fair to say Apple Pay has given mobile payments a nice kick in the pants. Adoption of mobile payments had been moribund prior to its launch. A big reason for the slow adoption of mobile payments to this point, especially in the U.S., has been the sheer number of payment choices available to consumers.
The average consumer carries around three cards in his or her wallet. Thanks in no small part to companies like MasterCard, those plastic cards work and work well. For all the recent talk of data breaches and fraud, the truth is that electronic payments—including credit, debit and prepaid cards—handle billions of transactions, worth trillions of dollars. Those transactions are measured in milliseconds while fraud is still measured in basis points. It’s difficult for any “new” payment method to penetrate a system that works so incredibly well.
And because our payment system works so well, it is also very easy to take it completely for granted. It’s virtually invisible. The launch of Apple Pay, with all its sleek sophistication, is, therefore, an opportunity to recognize just how incredible our payment infrastructure is. It is also an opportunity to compare our payment infrastructure to other markets where the options are few and consumers must rely on cash with all the inefficiencies, headaches and dangers a cash-based economy entails.
Recently, Bill Gates, through the Bill and Melinda Gates Foundation, has been promoting an idea that has been around for more than a decade: harnessing mobile technology in developing economies where many consumers lack access to basic financial services including payments, the so-called “unbanked.” In developing markets, where the penetration of mobile technology far outstrips banking, access to mobile networks can be the foundation for new payment networks.
Several successful mobile money programs already exist, with Kenya’s M-Pesa being the most well known. But literally billions of consumers worldwide remain unbanked and yet carry cellular phones. As in years past, efforts to expand mobile money systems will undoubtedly be a large topic of conversation at the upcoming Mobile World Congress in Barcelona.
For all the excitement over Apple Pay in the U.S., the big story in mobile payments—and arguably the most important—isn’t providing one more payment option in markets like the U.S. where consumers already have plenty of good options. Instead, the real excitement remains the possibility of providing access in developing economies to financial services through mobile technology, and improving the lives of billions of consumers worldwide.