We often hear about retailers talk about the battle for a share of the consumer wallet but the real battle at the moment is the battle for digital wallets. The main game is between banks who are keen to stay front and centre in people's financial lives and the big technology companies.
Last week the Australian Competition and Consumer Commission (ACCC) rejected three of the four big banks' request to collectively bargain with Apple for access to the company's payment technology. While the ACCC will not make a final decision until next year, Apple is settling in for the long haul, as are the three banks.
As reported in The Australian Financial Review recently, the banks are battling hard against Apple's refusal to grant them access to the Near-Field Communication (NFC) controller in an iPhone, which is needed for the banks own digital wallets to communicate with contactless payments terminals. The banks say this is necessary to enable their own digital wallets to compete with ApplePay.
The banks are also unhappy that they will not be able to pass on any fees they incur from using the Apple system to consumers.
A big question for consumers is how far they really want to go with Apple, which has become one of the world's more trusted large organisations. What is at stake is the huge world of mobile smart payments and social commerce about to reshape the way we consume and shop. It is not just online shopping or tap-and-go services at the local store but also transport across the nation as well as Australian consumers shopping via social platforms such as Facebook.
Rocky Scopelliti who is Telstra's global strategy leader, thought leader and industry expert in financial technology services, says smartphone technology, in particular Application Programming Interface (API) technology, is opening up a whole world of innovation for financial institutions and smarter payments.
"We are beginning to see financial institutions open up their systems to enable fintech or other providers to augment customer and payments data and we can anticipate a wealth of new payment applications emerging," Scopelliti says.
Embracing mobile commerce
And as they are opening up we're seeing the mobile device become the primary device to access financial services.
According to PayPal Australia's managing director, Libby Roy, mobile commerce is already a major force driving payments innovation in Australia.
"Businesses that have optimised for mobile are responding to consumers' call for simplicity in online commerce. The likes of Uber and Netflix have transformed our expectations of a mobile-first experience, so when we are looking at the future of payments, we need to put ourselves in the shoes of consumers that are demanding frictionless solutions that are embedded in their everyday lives.
Roy says Australians are fast adopters of innovation, particularly in payments. She says PayPal expects to see social commerce, shopping via a social platform, emerge as a new frontier for online commerce as of next year.
Unfortunately, many Australian businesses are not ready to go. According to PayPal's mCommerce Index released in September this year, 51 per cent of online business are not optimised for mobile. What's more, 89 per cent of businesses state they have no intention of accepting payments via social platforms within the next six months, and 34 per cent of Australian businesses do not have any social media presence while 25 per cent said they did not understand how social commerce works.
"The businesses that move to stay on the front-foot of consumer trends are the ones that will succeed. With consumers now simply expecting to transact whenever, and wherever they are, the ability to seamlessly and securely make a payment in a social context will soon become a business imperative," Roy says.
Scopelliti agrees and believes some exciting developments await us.
"When you start augmenting artificial intelligence and making some of the services such as the digital wallet predictive, we can really start to open up a whole new world of experiences and predictive services that we can anticipate, and the device we've chosen will be the connection between our digital and physical world."
To see more on the future of smart payment technologies, please read this report from the CBA
