Things change fast in the modern financial world. Just yesterday contactless cards payments were the hot new thing in financial services. However, across the media, reports are stating that contactless payments have had their day. Many claim in-app payments will be the next big thing and make contactless payments obsolete. It is important to note, contactless payments really cover everything from a tap-and-go debit/credit card to your Near Field Communication enabled mobile. It is the same technology stack and payment workflow behind services such as Apple Pay as it is for contactless EMV plastic they give you in a bank.
While it is always tempting to predict the next development in financial technology, is the death of contactless payments really true? Or, alternatively, is this new technology just the next one in a long line of attempts to revolutionize the world that now subsist in their own small niche?
Evangelists of in-app payments say they are going to replace contactless in daily activities. For example rather than tapping in a store, the purchase will be made on your phone and the product simply picked up. For example, ordering a drink in a bar or a meal from a restaurant, using the app to select your choice and paying before arrival. Imagine getting to a restaurant and your favorite steak and drink are already waiting for you when you arrive.
Equally, in-app payments are working for products such as Uber. You setup it once and use it each time you travel with their service. An app provides you not just payment here, but all the additional services – ordering a taxi, tracking availability and others.
However, just one small step aside from these scenarios makes use of in-app payments inconvenient and annoying. Imagine, it’s not your favorite restaurant, serving your favorite steak, but one you’ve found on the roadside during a trip. A chain or restaurant whose app you do not have. In such an instance downloading an app, setting it up and making an order with it gives you zero benefit, while creating a headache and introducing time-consuming clicks. Here rather than making life easier, in app purchases are just annoying. In this scenario a regular order with a waiter and a contactless payment makes for more sense. Alternatively imagine you come across a wonderful shop while on holiday, go inside and fall in love with a product. Making an impulse decision to purchase it. Do you really want to download this little shop’s app, log in, set up an account and then buy the item? Instead, it is quicker and more convenient to take it off the shelf, bring it to the counter and use your contactless payment card or NFC-enabled mobile.
To summarise, in-app purchasing technology only makes sense when ordering goods or services from the same provider on regular basis or as part of a wider service. Be it ordering a steak or booking a cab. However, if the service comes from an occasional provider, or where it makes little sense to order in advance, like paying for public transport, classic contactless will easily win. It is the easier, faster and more convenient way to pay.
Vasily Bernstein
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Tags: Downtime, Mobile Apps