21 January 2019
Mobile Proximity Payment is an inevitable evolution
Mobile payment is an international phenomenon. A revolution that continues to make a breakthrough even among Italians and that sees in the so-called Mobile Proximity Payment the real driving force. Big players (from Apple to Samsung, to Amazon and Google) are showing more and more interest and the new technologies (including NFC) are becoming more and more performant, favouring the distribution of mobile devices as a payment tool.
Mobile Proximity Payment includes “proximity” electronic payments, i.e. payments that require physical proximity between the purchaser and the seller of the product/service purchased. In this case, the transaction uses the potential of the contactless system, allowing transactions to be carried out with a mobile device (mobile phone, PC, PDA, Smart Display) using short-range wireless transmissions. The technologies on which this type of operation is based are the so-called NFC5 – Near Field Communication technologies. Payments that are activated by two-dimensional codes, such as QR-code and Data Matrix, are also considered Mobile Proximity Payment.
First concrete steps of Mobile Proximity Payment
Italians who make their payments through smartphones are increasing. In a market where digital payments by card counted for a total of 220 billion euros in 2017, Mobile Payment in Italy is worth 6.7 billion euros (up 60% compared to 2016), or 14.6% of New Digital Payment (46 billion euros). But perhaps the most interesting news of 2017 for Mobile Payment in Italy concerns payments in the vicinity, i.e. those made at the point of sale through mobile devices.
In fact, after several years of waiting and work we have seen the first concrete steps of Mobile Proximity Payment: more than 70 million euros have been passed through smartphones in stores, a clear growth compared to the 10 million in 2016. The Mobile Payment & Commerce Observatory of the Politecnico di Milano estimates that in 2017 just under 500,000 users have paid at least once with a Mobile Proximity Payment service.
Two technological strands
After years of slow growth, therefore, even in Italy it seems that these types of payment are ready to take off. Mobile Payment users are increasing, and it seems that merchants (especially the large ones) have understood the value of these solutions and their potential, thus training staff and setting up cash points. If in 2017 the transit by mobile phone was 70 million euros, the Mobile Payment & Commerce Observatory forecasts that in 2020 it can reach a value between 3 and 6 billion euros.
The growth in the Mobile Proximity Payment is mainly due to two technological strands: NFC payments, including services such as Apple Pay, Samsung Pay, PosteMobile, PAyGO from Intesa Sanpaolo, Monhey from UniCredit, Nexi Pay, BNL Pay, Hello! Pay and Google Pay; payments that use alternative technologies to NFC some use geolocation and mobile phone numbers – such as Satispay, Jiffy (which recently added NFC), HYPE and Tinaba – others prefer QR code, such as Mobysign or solutions proposed by merchants (Autogrill, Coop Liguria, Iper, Eni Pay, etc.).
The NFC world saw the official launch of Apple Pay in Italy in 2017 – initially with UniCredit, Carrefour Banca and Boon, followed in the following months by American Express, Banca Mediolanum, BCC, Edenred, HYPE, N26, Nexi, Widiba and, from February 2018, also by Buddybank – which led to TV advertising and word of mouth generated by Apple users themselves. In September 2018, Google Pay also arrived in Italy. The banks/suppliers of payment services adhering were: boon, HYPE, Banca Mediolanum, N26, Nexi, Revolut, Tim Pay, Widiba. Other names will be added to these, such as Poste Italiane and CartaBCC, among others.
As far as non-NFC payments are concerned, Satispay, the Italian start-up of current account payments, has transited over 35 million euros in 2017 to almost 26,000 qualified merchants, thanks also to cashback promotions and partnerships with large chains such as Esselunga and Coop. Jiffy, the interoperable payment system promoted by the main Italian banks, has started an experiment with Intesa Sanpaolo to pay in store (solution based on geo-location, mobile phone number or ultrasound) and foresees a massive launch with all the banks participating in the circuit, also using NFC technology (in addition to those already mentioned). These two services are flanked by those offered by HYPE (already active last year) and Tinaba.
In the coming months there will be more and more apps or products of this kind because the various competitors have understood that now is the right time to enter the Mobile Proximity Payment market.