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By now, mobile payment systems have been launched by each of the tech industry’s largest companies: Apple with Apple Pay, Google with Android Pay, and Samsung with Samsung Pay. Each service offers smartphone users a similar experience, allowing purchases to be made quickly and painlessly if a storefront has the required hardware, which in the case of Samsung Pay isn’t much. Since smartphones are increasingly running the show for humans, it was only a matter of when other tech companies would implement the features in their smartphones after Apple took the lead. However, mobile payments seem to have left another key piece out of the puzzle: banks.
Financial institutions are hoping to continue to dominate their market of payments, but Android Pay and its competitors have already established themselves as the go-to mobile payment applications. Still, at this stage where only early adopters are actively using these services, American banks certainly have the chance to impress their clients. Hoping to gain a head start over other institutions, Capital One has become the first bank in the United States to incorporate NFC-powered tap-to-pay features into a mobile app. NFC stands for near field communication and is the same technology used by Google and Apple (Samsung uses both NFC and MST, allowing Samsung Pay to work with a larger audience). After an update to Android OS now enables third-party apps to use payment data in much the same way Android Pay does, it appears Capital One will be only the first of many banks to add mobile payment systems directly into their existing apps.
Banks will benefit from a future where most payments are completed through the use of a smartphone because they collect fees for payments using their credit cards. If eventually more consumers lean towards using their bank’s services, the first mobile payment solutions may take a hit. Android Pay and Samsung Pay do not receive any compensation after a user pays with their services, a business method in contrast to Apple’s, who earns a portion of sales made with Apple Pay. Samsung is looking into possible ways to turn Samsung Pay into an additional revenue stream, such as charging store-owners for delivering special deals within the app.
It’s important to note that banks have significantly less leeway when dealing with Apple’s iOS ecosystem. The iPhone does have NFC technology built in, but Apple has placed limits on who is able to tap into it. In other words, Apple first party apps, like Apple Pay, have sole access of the iPhone’s NFC capacity. For now, mobile payments on iOS is only available to the smartphone maker itself, though it is possible Apple will unlock NFC capabilities to banks at a later date.
It seems that banks will be playing key roles in mobile payments soon. We could be witnessing the beginnings of a truly complex and competitive mobile payment market that promises to revolutionize the way we pay for everything from a cup of coffee to your new television.