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Capital One exec predicts mass shift to Apple Pay this year

NEW YORK – A Capital One executive at the Mcommerce Summit: State of Mobile Commerce 2015 predicted a mass shift to Apple Pay this year and the decline of magnetic stripe payments as more consumers carry their phones on their persons at all times.

One of the main takeaways from the “Capital One: The State of Mobile Payments and What It Means to Retailers” session is that mobile payments will have a significant effect on both consumers and merchants, with exponential projections for adoption rates. Apple Pay will likely continue to reign supreme this year, although Android platforms will also have their heyday, paving the path for newer payment solutions such as Google Wallet.

“I really believe we are at an inflection point,” said Paul Moreton, vice president of emerging payments at Capital One, McLean, VA. “When you look at what’s happening in digital, there are several examples that point to being at the beginning of exponential growth.

“We believe 2015 is going to be the year that the infrastructure changes radically with what you are able to do as a consumer and a merchant.”

The Mcommerce Summit: State of Mobile Commerce 2015 was organized by Mobile Commerce Daily and Mobile Marketer.

Mag stripes versus mobile
Although magnetic stripes on credit cards have been employed by many financial marketers for years, the immediacy of mobile payments is likely to disrupt their momentum. As credit card companies emboss and print consumers’ account information onto these stripes, consumers become stuck with the same card for a longer period of time, resulting in several years’ worth of static data for marketers.

Contactless payments were originally hindered by the notion that magnetic stripes work. However, the rapid expansion of NFC terminals, expected to reach between 47 to 50 percent this year, is changing that.

“I really believe we’re going to have this mass shift over to contactless payments,” Mr. Moreton said. “What you see is this huge change over a relatively short period of time.”

Android platforms are also taking off, thanks to the KitKat and Lollipop solutions.

“You’re getting to the point where even this year, 50 percent of phones have the capability to make payments,” Mr. Moreton said.

The security standpoint
All financial marketers must keep security at the forefront of their initiatives. Capital One has heavily invested into security features, a feat that has garnered positive responses from customers.

“The customer wants security,” Mr. Moreton said. “It comes up over and over again.

“In Apple Pay, what we’ve done is set up a way to do verification inside the Capital One Wallet. The customer knows that we are protecting their identity and protecting their credentials.”

It is also important to leverage easy-to-find transaction details, so that users may go back and understand where they spent money.

For these reasons, Mr. Moreton detailed the problems and lack of traceability with bitcoin payments. However, he believes Facebook will go further into mobile payments after delving into person-to-person payments with the Messenger application’s new feature.

“Banking is a digital product,” Mr. Moreton said. “There is no physical product to a bank; it’s all ones and zeros.

“We are moving into this huge change that is going to impact banking in a huge way,” he said. “There will be winners and losers in this.

“It’s not linear change, payments is just one of the first things to go digital.”