As contactless transactions using cards and digital wallets soar, digital acceptance via mobile, or “Tap on Mobile”, is opening up electronic payments to new merchant categories. PCM investigates the next phase of the digital revolution in partnership with Discover Global Network (DGN).
By now, it’s widely understood that the recent pandemic has accelerated a number of trends in payments. What was a gradual shift to contactless payments, for instance, has become a surge: research from Norway’s TietoEVRY shows[1] today’s consumers in Northern Europe use contactless for eight out of ten transactions – around double the figure seen just two years ago.
“The gradual shift to contactless payments has turned into a surge.”
In the same way, payments analysts Nielsen[2] tell us “click and collect” – where consumers buy online, then pick up in person – has doubled world-wide since the start of the pandemic, while overall cash use continues to decline. Data from WorldPay/FIS[3] claims cash use declined by 20 percent in the US last year, while global digital wallet use now outstrips cash at the point of sale.
Tap on Mobile: Less cash, more merchants
As more merchants accept electronic payments and cash use declines, merchants are looking to accept payments using cheaper and more flexible technologies than traditional point of sale (POS) devices. Enter “Tap on Mobile” – a suite of software tools enabling mobile devices to accept contactless payments without the use of an external reader, USB or “dongle.”
Tim Dziubek, Director of Payment Products at Discover Global Network, says acquirers are seeing huge demand building for such solutions. According to Dziubek, three factors are driving this change – a global shortage of the chips used in most card readers, consumer concerns about hygiene when using POS devices that require customer inputs, plus the reduced costs, greater capability and faster speed to market offered by Tap on Mobile.
“For acquirers and merchants, Tap on Mobile means a store can be accepting payments in minutes, rather than waiting days or weeks for a card reader to arrive,” says Dziubek. “But the advantages of such systems aren’t limited to speed and convenience – we’re seeing a growing range of use cases for Tap on Mobile, both in-store and elsewhere.”
“We’re seeing a growing range of uses for Tap on Mobile systems, both in-store and elsewhere.” – Tim Dziubek, Discover
David Poole is Global Head of Mobile Solutions at MYPINPAD, a SoftPOS solution that makes payments easier and safer for merchants. He argues that Tap on Mobile software solutions expands the use cases for payment acceptance and makes it easier for merchants to start accepting card payments faster.
“There is a real desire within the payments industry to condense the time it takes to get a merchant actively accepting payments. The goal is to enable the merchant to enquire in the morning and be accepting payments in the afternoon and Tap on Mobile can help enable that.
Tap on Mobile also opens new markets with “digital payment on delivery” being economically viable, whether those payments be at home or on the roadside.”
“Analysts predict the Tap on Mobile market will grow to more than $76 billion by 2025.”
Because Tap on Mobile systems can be updated automatically over the air, rather than manually, merchants are able to accept a much wider range of payments compared to traditional POS devices – while mobile terminals mean reduced queues, with payments brought directly to the customer in-store.
Other functions, such as combining ordering with payment in restaurants and bill-splitting options can be readily added.
PCM’s proprietary research confirms Dziubek’s view of huge demand in this segment. Our Digital and Card Payment Yearbooks 2021-2022 show Europe’s POS estate grew by 8 percent last year[4], and we predict overall growth of 30 percent by 2026 – with many of these new merchants being small chains and mid-market players looking to adopt Tap on Mobile as an entry to contactless payments.
Two separate market analysis exercises by TMR and YouCloud envisage growth in the Tap on Mobile market of more than 35 percent per year to 2025 for a global market value of more than $76 billion.
Developing an affinity for Mobile
Away from core customers such as merchants and acquirers, Tim Dziubek says software developers also appreciate the benefits of Tap on Mobile: “Developers like Tap on Mobile, because merchants can download the system from an app store just like a game or streaming app.
And the fact that industry certifications such as the EMV standard are tied to the app, rather than a device, means updates are made faster and easier.”
Dziubek says Discover is working with mobile app developers to ensure new Tap on Mobile systems accept Discover-branded payment products via a bespoke Software Development Kit (SDK) for use by developers focused on both merchants and acquirers.
Away from traditional markets, Dziubek sees use cases developing in everything from municipal transit – in which mobile devices are increasingly used to sell tickets or confirm purchases on board trains and buses – through to access control to concerts, exhibitions and events.
Perhaps best of all, from the payments perspective, is an emerging use case in which Tap on Mobile systems are used as a form of ID authentication for e-commerce. “After completing a transaction, a user can tap an NFC-enabled card against the merchant’s mobile device to confirm the person receiving the order is the purchaser”, he notes.
“While confirming the purchase, the merchant has the opportunity to convert a card-not-present e-commerce transaction into a card-present transaction, and significantly reduce the risk of that transaction – as well as speeding up authentication.”
With whole new merchant categories opening up to electronic payment, and the possibility of realising the once-distant promise of combining payment with other activities such as ordering, pickup and travel, Tap on Mobile looks set to transform the acceptance market every bit as much as digital devices and wallets have changed the way consumers pay.
To find out more about Discover® Tap on Mobile, visit: http://discvr.co/TaponMobile
[1] See: https://www.tietoevry.com/en/newsroom/all-news-and-releases/press-releases/2021/03/time-for-biometric-security-on-contactless-cards-new-research-from-tietoevry-reveals-uk-consumers-contactless-concerns/
[2] https://www.nielsen.com/wp-content/uploads/sites/3/2020/07/07-09-20-COVID-Infographic.pdf
[3] https://worldpay.globalpaymentsreport.com/en/
[4] See www.paymentyearbooks.com
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