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Javelin exec: PayPal spin-off to open door wider for Apple Pay, NFC

LITCHFIELD PARK, AZ – A Javelin executive at the Mobile Shopping Summit 2014 said PayPal’s split with eBay would provide an opportunity for Apple Pay and NFC to drive adoption.

The executive’s “Mobile Wallet – State of the Union” session looked at new data showing consumer support of mobile wallet solutions and a worldwide, leading support for NFC payments. The next step will be for NFC to woo MCX merchants to gain momentum.

“The number one brand is PayPal,” said Mary Monahan, executive vice president of mobile at Javelin Strategy and Research, San Francisco. “They have 152 million active accounts, and we know they will be splitting with eBay next year.

“I can tell you that whenever you have a big action like that, no matter how good you are, it takes a company’s mind off of what’s going on,” she said. “They’ll be busy doing the split, and that’s going to allow other players to move ahead.”

The Mobile Shopping Summit was organized by Worldwide Business Research.

Willing and ready
The new research released Oct. 8 shows that one in every five smart device holders has used a mobile wallet in the last 90 days. Meanwhile, the mobile consumer spend has reached $60 billion in 2013. Only three billion of the prior took place in-store, while the rest were elsewhere, such as on mobile apps.

IPhone users spend twice as much per month than Android users.

There is a rising tide of mobile purchasers that are buying physical goods; more than 51 percent in 2014 are doing this.

Primary banks hold the top spot among consumers, but their lead is shrinking. As giants PayPal, Google and Apple are moving up, consumers may be less likely to adopt other solutions, such as Softcard.

Top brands are competing most fiercely on innovation and privacy. While Google, Amazon, Facebook and Apple are consistently innovative, PayPal, Visa and Mastercard are leaders in privacy.

Javelin has coined the “Gang of Five,” consisting of Google, Apple, Amazon, Facebook and PayPal, which are all growing exponentially in privacy and innovation. The gang is moving upwards in trust and is the core group to pay attention to.

The biggest hurdle in mobile wallet solutions is believed to be security, but it is actually ranked as the second highest hurdle. The number one hurdle is habit, as consumers are simply not used to making payments in this form.

The most receptive group in the general consumer base to contactless payments is wearable owners, followed by iPad owners, tablet owners and iPhone users. Ms. Monahan pointed out that Google is not seen on the list.

She also noted Apple’s announcement of Apple Pay given the upcoming EMV fraud liability shift coming in 2015.

Geographically, China, Japan and South Korea have for the most part accepted NFC payments, and Javelin believes the U.S. will see similar adoptions.

Since NFC is seen as the payment standard of the future, given its support by Apple, Google and others, its next step will be to convince MCX merchants.

Ongoing predictions
EBay’s decision to spin-off PayPal – something company executives insisted was not in the works just months ago – reflects how quickly mobile payments are heating up following Apple Pay’s launch, renewing enthusiasm for near-field communications technology.

PayPal is one of the early success stories in mobile payments, with strong consumer adoption enabling it to process approximately $20 billion in mobile payments volume last year. However, more recently the focus and excitement around mobile payments has shifted to Apple Pay, near-field communications technology and Stripe, with PayPal appearing to lose some of its headwind as a result (see story).

Javelin’s Ms. Monahan confirms these predictions.

“Consumers are primed for mobile wallet adoption,” Ms. Monahan said. “While banks hold a number one spot, their lead is shrinking over time.

“PayPal is the number one brand,” she said. “Apple Pay is gaining steam; it’s simple and secure, but it’s going to have to woo MCX merchants.

“NFC is the standard of the future.”

Final Take
Caitlyn Bohannon is an editorial assistant on Mobile Commerce Daily, New York