On the whole, the payments industry has not encountered much change over the course of 2017. Payment services operating within Europe have been adapting their services in preparation for the introduction of the revised second Payments Directive (PSD2) in January.
However, this update in legislation has been well anticipated by the industry, and while many of these changes have been rolled out slowly this year, they are unlikely to fully disrupt the sector until the Directive takes effect.
Mass market adoption
The fundamental requirements for enabling mass market adoption of mobile payments have also remained the same, with strong customer authentication, authorisation and payment transparency remaining at the forefront of all developments in technology and services across the sector.
The upcoming changes in light of PSD2 will, however, see payments providers place further value on these factors, as concerns over consumer security increase and the adoption rate of mobile money accounts amongst consumers increases globally.
In 2018, we hope to see mobile payments become as widely adopted across the UK and Europe as mobile wallet transactions across sub-Saharan Africa.
Throughout this region, payments via mobile money accounts are rapidly overtaking physical cash as the dominant method, and are diminishing the mass adoption of bank and credit cards for daily use.
More consumers across Europe are now realising the benefits of paying directly via their mobile. Merchants are therefore increasingly looking to mobile payment providers to help them replace existing cumbersome payment processes with the simplicity of using a mobile phone number, to allow consumers to verify and make instant purchases for goods and services more securely.
By using a mobile phone number as the ‘billing identifier’ for a transaction, consumers are able to eliminate the process of entering lengthy credit card details, which ultimately improves the entire payment journey.
Not only is the convenience of this process fundamental to the increase in uptake of mobile money worldwide, it also presents a clear opportunity for new players wanting to disrupt in the current market.
The nature of mobile payments will also allow merchants and service providers to maximise sales, by tapping into the downturn in consumer purchase rates which typically occurs towards the end of each month.
Charging purchases against a mobile money account enables consumers to fill the gap in the lack of available funds during the last two weeks before payday, giving them the opportunity to complete more successful purchases.
As a result, we may well see mobile payments act as a catalyst for change in consumer shopping habits over the next year, whilst helping more merchants to continue driving sales.
Simon Pepper is Head of Product at Tola Mobile