In The Netherlands, a major breakthrough in mobile contactless payments is expected in the very near future. The reason: paying with your mobile phone is even easier and more convenient than paying with a card, and consumers are getting used to their mobile phone as their go-to device on which they can use more and more services.
I recently hosted a series of roundtables on this subject at the Dutch conference ‘The Future of Payments’. Together with banks, retailers, competitors, telcos, insurance companies, government officials and independent consultants, I believe there are five elements we need to facilitate this breakthrough, which will accelerate the growth of mobile contactless in The Netherlands:
The vast majority of new smartphones in The Netherlands are ready to support mobile contactless. With a short average economic life span of 2.5 years (source: the Dutch Consumer Federation), the number of mobile devices unable to support contactless payments will decrease rapidly over the next few years. As a country, we’re also ready to go on the acceptance side: more than two thirds of POS terminals are equipped with NFC, and the amount of vendors able to accept mobile payments is still growing. On top of that, the majority of banks in The Netherlands offer mobile contactless solutions: ING, Rabobank, ABN AMRO, and in the near future De Volksbank.
Most participants agreed that the step from contactless with card to mobile contactless might be a larger one than the shift from traditional card payments to contactless card payments. This is down to the change in device. Mobile devices are something consumers, on the whole, do not (yet) use to make POS transactions. Education is therefore key; particularly around understanding the security using mobile payments, but also around the increased convenience for consumers. Soon they’ll no longer need to take a card with them when shopping. Last but not least, it’s important we educate consumers about mobile devices becoming their central device for using more and more services, from in-home applications, geolocation and payments, to the connected car.
In driving mobile contactless growth, we first need to focus on consumers who are open to innovation – mostly, but not exclusively, digital native millennials. These consumers will act as early adopters of mobile contactless, with other consumer groups likely to follow the trend thereafter. It is expected however, that a significant percentage of consumers, mostly elderly, will not adopt mobile contactless at all. For them, we need to maintain the infrastructure and POS possibilities for more traditional payment methods for the foreseeable future.
4. A multi-track approach
Although it’s clear that the end user is a crucial factor in the success of new payment methods, it’s not easy to tell which party will be the most powerful in driving innovation: the retailer, the bank, the smartphone provider, or the consumer. In fact, all of them are key players. Therefore, a multi-track approach is needed, to ensure these target groups are educated on the advantages of mobile contactless payments and therefore reinforce each other’s willingness to take the step towards mobile contactless.
5. Added value
It’s important to add value for consumers, banks and retailers, above the obvious advantages. Including associated services within the mobile contactless payments solution, such as integration of advertising, loyalty services and geolocation features, will help accelerate growth of mobile contactless in The Netherlands.
During the conference, it became clear that most stakeholders see a bright future for mobile contactless. Today’s teenagers, younger children, and also millennials, consider their mobile phone to be their number one device for all sorts of transactions and services. An increasing number of devices are NFC-enabled and Dutch banks continue to develop more mobile contactless payment solutions.
This is no reason to sit back. The question is not whether mobile contactless will be adopted broadly, but when. There are plenty of things we can do to accelerate growth: continue to develop equipment and educate consumers, adopt a multi-track approach to targeting consumers, retailers, and banks, and, of course, continue to add value within mobile contactless payments.
At Visa, we don’t sit back either. We constantly engage in constructive conversations with our Dutch clients, where we discuss how to encourage and facilitate the growth of this secure and user-friendly payment solution. We believe mobile contactless is an important next step in the development of payment methods - in The Netherlands, and globally.
By Daniel van Delft, Country Manager, Netherlands • Visa