Although portrayed as a horse race by many in business media, the emerging contactless payment systems are more complementary than competitive, at least to the major credit card networks.
News leaks seem to be coming out each week about when Android Pay will launch—the most recent rumored launch date is Sept. 16, according to Verizon. Reports about Apple Pay alternately bemoan its slow roll out and hype Apple Pay's latest growth numbers. And Samsung Pay is off to a reportedly strong start in its home country of Korea. Ed McLaughlin, MasterCard's (NYSE:MA) chief emerging payments officer, looked at the big picture and told Fortune, in essence, it's all good.
McLaughlin reported strong growth for Apple Pay, significant potential for Android Pay, with room left in the market for Samsung Pay.
"We see all of this as highly complementary," he said. "Whether you use the plastic card, whether you use the device, we're tying it all back to your MasterCard account. And I think the most important thing that's often missed: You get all the rights and benefits in Android Pay and Apple Pay that you get from a genuine MasterCard transaction—all the protections. So whether it's rewards or cash back or zero liability, all of that's retained regardless of the environment you use it in."
Initially people using Apple Pay would identify the transaction with the app. "But it's a MasterCard transaction that's being generated from that environment. If you have a MasterCard account, we want to enable whatever makes the most sense for you in your life and make sure it works really well," he said.
In the end, with the exception of Merchant Customer Exchange's CurrentC —and this might change—all will serve as conduits for payments made with MasterCard and its competitors. This new payments convenience will also benefit retailers.
A new report from Juniper Research found that the number of mobile wallets using contactless technology will grow 100 percent to 200 million by the end of next year, Fortune reported.
Apple Pay will be accepted by 1.5 million locations in the U.S. by the end of 2015, according to Apple CEO Tim Cook. Earlier this year, Cook said Apple Pay made up two out of three dollars spent on purchases using contactless payments across the major credit card companies, including Visa, MasterCard and American Express.
Although some have criticized the slow consumer acceptance of Apple Pay, McLaughlin said, "we're seeing strong uptake. But these technologies will take time to grow. Particularly with Apple Pay you need to have a new iPhone to start using Apple Pay [older versions of the iPhone are not compatible]. But we're seeing adoption track really well."
Android Pay is more interesting to McLaughlin because of its compatibility with the next Android operating system version, which most Android phone owners will be able to use. "I think there are over 1,000 different handsets that are out there that will be able to accept Android Pay, giving it a bigger installed base for that. So it will be interesting to see how quickly that moves," he said.
When asked about Samsung Pay as more of a direct competitor to Android Pay, McLaughlin said there are going to be lots of environments for payments. "One of our mantras is that every device is going to be a commerce device. Your game system and your car could all become places where commerce takes place. And we will see payments on wearables that are coming out. As more devices get connected and smarter, those create opportunities for commerce."
For the future, McLaughlin cited the experience in Canada and Australia, where consumers who use tap-to-pay more than two ot three times don't return to their prior behavior because contactless is so much faster and convenient. "In Australia, around 60 to 70 percent of our transactions under $100 are already contactless because consumers like the speed and convenience," he said.
"In markets like the U.S., where 80 percent of VeriFone's new terminals are already shipping with contactless payments enabled, you have merchants like Best Buy, Target and Rite Aid now turning contactless back on. We think that's just going to be part of the payments infrastructure," McLaughlin said.
Next year, consumers will start to see payments built into all the major operating systems, allowing unprecedented access and convenience. "You'll see an acceleration of consumer interactions, particularly around commerce, in all devices. So the ongoing sophistication of mobile shopping apps and more merchants accepting electronic payments will be essential. And we will see the acceleration of e-commerce transactions, which represent 15 percent of our business," McLaughlin said.
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