New phase of mobile wallet evolution

There are still opportunities for domestic players - banks, telcos and fintechs - to develop competitive solutions ahead of the arrival of the Pay solutions. Especially in Europe and the UK with the introduction of PSD2 and CMA Open Banking regulations.

Mobile wallets – Android Pay, Apple Pay, Samsung Pay (the ‘Pays’) - are popping up in more and more markets and constantly announcing impressive results. It is clear that we have moved into a new phase (but not the final stage) in the evolution of mobile wallets and payment services – one that focuses on solutions tailored to the established mobile customers.

For mobile wallets, the most recent phase of evolution centered on the wider availability of service and a better payment experience. This resulted in a complicated ecosystem based on multiple payment technologies (NFC, QR code to name a few) and a broad range of players including telcos, banks and startups looking to get top of wallet.

While this ecosystem persists to some degree, it has changed rapidly in the past year due in a large part to the growth of the Pays. Taking advantage of their strong consumer brand presence, these solutions are pushing the global payments industry to adapt and accept their wallets, the most recent example being Apple Pay in Japan. Here, the use of the FeliCa NFC technology was once was an obstacle to entry but now new iPhones will be equipped with the Sony-based technology.



Although adoption of the Pay solutions has been slow (Apple Pay adoption in the U.S. remains below 25% according to PYMNTS[i]) and will remain so for the next few years, the addition of value added services and the inclusion of in-web and in-app payments has created a new payment ecosystem with significant potential giving mobile wallets room to evolve further.

But this is not to say the Pays are destined to corner the mobile wallet market. While the payments industry feels awfully small at times, the world is a big place and there are still opportunities for domestic players (whether they be banks, telcos or fintechs) to develop competitive solutions ahead of the arrival of any Pay solution. Especially in Europe and the UK where PSD2 and CMA Open Banking regulations come into effect in the next few years.

Even in markets such as the UK where Samsung Pay will probably join Apple and Android by the end of 2016, there will still be opportunities for local issuers and other players, for example MasterCard’s renewed mobile wallet push in MasterPass. This is especially relevant if these organisations can address key consumer mobile payment concerns such as data security and effectively utilise data held by banks to drive better value added services. While it is becoming more difficult to launch independent mobile payment services, this is by no means the end of the evolution of mobile wallets.


Follow our payments expert Tristan Hugo-Webb and our fintech expert Jeff Tijssen on Twitter.





About the Authors

tristan hugo-webb

Tristan Hugo-Webb is a Consultant at Capco’s London office, with over four years of experience in global payments research and consulting. Tristan served as the International Payments Analyst at Mercator Advisory Group, where he produced research on a broad range of payment topics, including consumer payment preferences, emerging payment technologies and alternative payment service providers.

jeff tijssen

Jeff Tijssen is the EMEA Head of Fintech and Partnerships at Capco. He chairs the Fintech Working Group and the China Working Group at Tech London Advocates, and leads the International Workstream for the City of London Fintech Advisory Board. Jeff advises a number of technology start-ups, is a mentor at several accelerator programmes such as Virgin Startup and Startup Bootcamp, and an Advisory Board member of CodeFirst:Girls.


The content and opinions posted on this blog and any corresponding comments are the personal opinions of the original authors, not those of Capco.