The development of the smartphone as an omnipresent companion in people's everyday lives is also transforming the payments market like hardly any innovation before. Driven by tech giants like Apple and Google, mobile payments have found their way into everyday life. Nevertheless, most of the development is still to come. Cards or cash are still used more often to pay, but in the future the smartphone will become the standard. In terms of customer convenience, additional services will then also be offered and the payment process will move further into the background. In addition to tech giants and payment service providers, banks and savings banks are also facing complex competition with great potential.
Mobile payments, i.e. the initiation, authentication or authorisation of money transfers via mobile devices such as smartphones or smartwatches, take place in various ways. Mobile payments solutions can be realised as individual payment apps, bundled wallets or as banking apps directly linked to online banking. The providers are financial institutions, big techs, corporates with their own merchant apps or the providers of individual payment services. The market around the direct customer interface is complex and contested on various levels.
In purely technical terms, mobile payments apps for the stationary point of sale primarily use three methods: near-field communication (NFC), optical methods such as QR/barcodes and Bluetooth Low Energy (BLE). Currently, the majority of offers are based on the NFC standard. With the help of digitalised payment cards on the smartphone, the existing terminal infrastructure of the retail sector is used and a high level of acceptance is achieved.
In contrast, the technologies listed are not necessary for the execution of mobile payments in online commerce because there is no physical meeting of payer and recipient. The verification of the counterparty required for payments takes place in the check-out process by means of available, secured personal data. Mobile payments in e-commerce and app-to-app payments are possible with digital payment cards as well as numerous other payment services via corresponding apps.
In the meantime, bundling applications are increasingly found among the apps which are intended to reduce the complexity of the many payment methods from the customer's point of view. These include several payments products today and will continue to do so in the future in order to simplify the payments process. Moreover, additional services related to the payments process are also finding their way into mobile payments apps. While today's implementations already include loyalty programmes, buy-now-pay-later offers or management options, in the future Request to Pay, digital currencies including cryptocurrencies, digital identities or even non-fungible tokens (NFTs) will be added.
The path to purely mobile solutions – called soft POS – has also begun for the acceptance process. For example, banks and technology companies already offer entire NFC card terminals as smartphone apps. Additional hardware is not necessary. Even accepting payments by means of optical methods is no longer a rarity thanks to providers such as PayPal.
Banks are faced with a number of complex implementation projects in connection with mobile payments: the development of mobile payments apps, the integration of payments applications, but also the further development of applications and schemes have to be managed. We support our customers in the implementation and thus lead them to the desired customer-oriented target image in a joint agile procedure.