To tap or not to tap: that is the mobile payments question

There’s a lot of consumer frustration over mobile contactless payments, but that may not matter if apps, not contactless, are the future of mobile payments

How are mobile payments getting on in the UK? According to the most recent figures from Transport for London, mobile phones now account for about 8% of their contactless transactions, so clearly there are plenty of people who already use the phone in their hand rather than reach for the card in their pocket. Yet as many commentators have observed, out in the wider world – whether AndroidPay or Tesco PayQiq, PayM or Barclaycard Mobile – mobile payments seem to be facing something of a struggle to become mainstream.

Ahead of Consult Hyperion’s annual Tomorrow’s Transactions Forum last week, we asked our good friends at Crescendo to use their array of clever Twitter sentiment analysis tools to give us an up-to-the-minute snapshot of the UK. They found that in conversations about mobile payments (which are dominated by Apple Pay, accounting for almost four-fifths of the conversations) there are roughly twice as many negative conversations as positive ones!

Now that might be because people are quick to vent on Twitter when something doesn’t work properly but slower to praise when it does (I’m certainly guilty of this), but if we take the sentiment analysis at face value it seems to show that customers by and large like mobile payments when they work, but are frustrated with the experience because it just doesn’t work the way it should and where it should.

There are a variety of reasons for this, ranging from gaps in the training of checkout staff to a failure of education (most people still don’t realize that the £30 limit that applies to contactless cards does not apply to contactless mobile payments so you can use your phone for your weekly shop) and confusion about acceptance (in some shops, for example, you can pay by contact with some cards but not pay with those same cards using mobile contactless).

Now, mobile payments is not all about mobile contactless. It’s about mobile initiated transfer of money from one account (the consumer’s) to another account (the merchant’s). And while we use cards for this now (except in Starbucks where we all use our app), with PSD2 on the horizon and MasterCard’s purchase of VocaLink, we can certainly expect to see more direct-to-account credit transfers in the consumer marketplace.

So we asked Crescendo to see if there’s any talk around this. They found that right now those conversations are dominated by Barclays PingIt and while the negative comments still outweigh the positive comments it is, rather interestingly, by a much smaller margin than for mobile contactless. I wonder if this is perhaps a weak signal that mobile payment apps will be more popular than mobile contactless taps?

Does any of this matter? Perhaps the way that mobile payments work now isn’t much of a guide to the way they will work in the future. Maybe tapping on things, whether a card or a phone or a wristband or anything else is all a bit “last year”. Maybe it doesn’t matter whether people tap phones or cards because in time all payments will be going in-app (or in-browser) and that’s where we should be focusing for the future. The web’s standard body, the World-Wide Web Consortium (W3C), is currently working on a standard for these payments, and this will likely hasten the physical and virtual convergence.