Retail m-commerce sales in the US totaled $207.2 billion in 2018, and contactless payments have grown modestly — the number of contactless transactions on the NMI platform has grown from just over 100,000 in 2016 to about 2.2 million in 2018. But as US consumers are testing the waters of mobile payments, consumers in other parts of the world are all in.
In an interview with PYMNTS, NMI CEO Vijay Sondhi shared some insights about the circumstances that shaped widespread mobile payment adoption in three countries:
In late 2016, India’s demonetization invalidated 500 and 1,000-rupee bank notes, which resulted in long lines at banks to cash out and exchange old notes for new. Also, says Sondhi, it triggered a wave of people choosing cashless, electronic payment transactions. “It’s a fascinating case study for all of us to look at. I don’t know of another country that’s done it in such an advanced way,” says Sondhi, and adds that India shows us “if conditions are correct, you can have a massive explosion of electronic payments.”
India spearheaded RuPay debit cards for consumers to give them a low-cost or no-cost alternative to using cash, creating open APIs to encourage innovation and drive use of the debit network. Sondhi points out, however, that the fees Visa, Mastercard and other brands charged, allowed them to build the payments ecosystem in the US and all the safeguards that consumers enjoy like zero liability and rewards. The system in India is driven by push payment, which is harder to reverse or get a refund if products or services aren’t to the consumer’s satisfaction, unlike pull payments used in the US. Sondhi says third-party mobile wallets could ensure transactions and deal with disputes for an extra fee. He says it will be interesting to watch “India phase 2” to see who will monetize payments and how it will benefit consumers.
Australia leads the world in contactless payments, with 325.4 million contactless transactions in 2017, an increase of 26 percent from 2016. Sondhi says contactless payments are easy and convenient — you just tap and go. And they’re secure. Contactless payment cards use the same cryptogram technology in EMV cards, so if a hacker accesses card data, it can’t be used to create fraudulent cards.
Australians had contactless payment cards before Apple Pay was introduced, and analysts predicted they would have massive adoption of the mobile wallet. But they didn’t. “They found that digging a card out of their wallet or purse and tapping it was easier than getting the phone, unlocking it, finding the wallet app, and then tapping,” he explains.
Regarding mobile payment adoption, Sondhi says, “I think Australia nailed it — with a piece of plastic with an antenna that’s both convenient and secure.”
Sondhi says long before Alipay and WeChat Pay had taken off, the QR code already had widespread penetration. People commonly used it to acquire information and share personal data — so scan-to-pay was a logical next step. Alipay and WeChat Pay merged social media and mobility with the payments system. “We’ve seen that sort of thing in the US with Venmo, but name in the manner we’ve seen in China,” Sondhi comments.
Sondhi says there are some major differences that make it difficult to compare China’s mobile payments market and the US’. For example, in the US, activity is regulated with banks handling money and consumer protections in place. But in China, those lines are blurred. Another major difference is that the US has a 100-year tradition of brick-and-mortar shopping, but China, with little physical retail, “leapfrogged” straight to mobile commerce.
Still, China’s mobile payments market, 50 times larger than the US’, illustrates that a user experience that consumers want can fuel major mobile payment adoption.
Will There Ever Be a Single, Global Mobile Payments System?
Sondhi says each mobile payments market around the world is unique. The US and Europe’s legacy of brick-and-mortar stores and consumers craving a mixture of physical and online commerce is different from the infrastructure and consumer demands in India, Australia, and China.
Although developments in other markets can inform and enhance mobile payments in the US, Sondhi concludes, “We’re not going to have a one-size-fits-all globally.”
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