Apple Pay is dead on arrival. Samsung Pay is delayed. CurrentC won't even get that far. EMV has negative ROI. Those are just a few of the story lines of the past few weeks. All seem to ignore one important point: this is very new stuff.
When I saw a headline in Forbes—"Why is almost no one using Apple Pay?"—I actually yelled at the computer screen: "Because it's new!" The writer went on to make some very good points about how small businesses hate any and all fees related to payments, especially credit card interchange costs, and are none too pleased about having to invest in additional devices at the point-of-sale for the mobile apps.
But the fact remains that "almost no one" is using Apple Pay because it is still being rolled out, it's only available for the latest iPhones and a good number of those new iPhone users probably aren't interested in it—yet. A big part of the problem is Apple's own hype machine, which is promoting the vast number of retailers who will soon be accepting Apple Pay. This is growing, but probably not as fast as they predict.
A similar scenario played out earlier this year when fraud related to Apple Pay came to light. This particular fraud had little to do with Apple Pay and its security features, but rather the banks that were processing new users at breakneck speed. But because Apple had loudly hyped the security features of its new payment system, this problem of growing pains got a lot of media oxygen.
The postponement of Samsung Pay's release is even more of a nonissue. Who is to blame them for wanting to get it right, especially with looming competition from Google's Android Pay. And then what about CurrentC, backed by Walmart and other big retailers? Who knows. Let's wait and see.
There are questions of how these competing systems will coexist. It would seem that before Apple Pay can gain traction, there will need to be a payment system on the Android side of the fence, as Android represents more users. Some backwards compatibility, as Android Pay is said to offer, would help too. I just bought a new Android phone last year for $600 and am not about to buy another one just to use a payment app. Take note, Samsung (pun intended).
The question of fees is never going away. The payment system providers need to fund their services, and smaller retailers think they are unreasonable. Many smaller businesses will never accept contactless payments, let alone credit cards.
Finally, there's EMV not returning an investment said to be $35 billion for the retail industry, as IHL reported recently. I'm not sure we can put a price on a technology that has proven to rein in fraud. Reasonably, many retailers are urging the card issuers to go with chip-and-PIN rather than chip-and-signature because it provides even great security.
Also, it's imperative to give the U.S. retail industry more time to implement it by pushing back the fraud liability shift deadline. Pointing fingers about the lack of readiness is irrelevant—let's get it done and get it done right. In the meantime, phone-based payment systems may become even more effective at combating fraud.
It comes down to the old adage, "The customer is always right," and retailers' customers want more payment options that are also more secure. The payment industry's customers—the retailers—want chip-and-PIN, as well as a little while longer to transition to EMV. The track record of those who ignore their customers' preferences is not a pretty one. -Dan