Mobile Wallet Not Going To Displace EMV


How mPOS Makes the Future of Payments Possible 

Guest Post By Jeremy Gumbley, CTO of CreditCall in New York


Innovations in mobile technology have made smartphones our go-to source for nearly all activities from search, to location pinning and sharing, and most recently, payments. According to Forrester Research Inc., mobile payments reached $12.84 billion in 2012 and will grow 601% to $90.05 billion in 2017. Meanwhile analyst firm Gartner reports that mobile payment transaction values will reach $235.4 billion in 2013, a 44 percent increase from 2012 values of $163.1 billion. Assuming that the finals figure for the whole of 2013 will be accurate, this certainly puts mobile payment usage into context.


The explosion of smartphone ownership in the United States continues, reaching nearly 65 percent in 2013 according to Nielson research, and leading many industry experts to predict ‘the death of the card.’ This prediction often brings skepticism as to the value of migration to the EMV chip card standard. Supporting the notion that the card will not yet die, comScore reported that there were one billion credit and debit cards in circulation in the United States in 2012 – approximately three cards for every person. However, hype around digital wallet usage and uptake belies the reality – mobile payments are very much an emerging and fragmented technology, which is not evolving at anywhere near the rate required to invalidate EMV.


With the digital wallet skepticism and consumer attachment to cards lies the fact that credit cards are a somewhat trusted and familiar method of payment, and despite truncated adoption times for new technology, consumers are generally change averse. This reluctance is compounded by the fragmented and confusing mobile payment landscape. With underlying network operators, financial institutions, new generation payment providers such as PayPal and Square, and now big players such as Apple, all competing for a piece of the ‘mobile payments pie’, we are facing a huge ecosystem of divorced, incompatible, media-hyped technologies. In addition, network operators and handset manufacturers have been fighting for a larger percentage of the transaction.


The benefits of NFC for the card issuers are clear – reduced costs in both distributing physical cards, and customer support, particularly around ‘lost or stolen’ issues due to the capacity for immediate revocation. For the consumer, it’s not so clear where the efficiencies and appeal lie over a conventional wallet or cards as it’s typically security and ease of use as top concerns when thinking about payments. As with many innovations, it could be argued that we are looking at a technology in search of a use case.


Retailers cannot afford to delay their migration to EMV for fear that the technology will be redundant in the face of mobile payment uptake. As mPOS becomes much more mature, retailers need to take a serious look into solutions that provide a practical way forward rather than a theoretical one. For most retailers, cost is often a consideration which the average being around 2.7% per transaction, according to Ovum.  However, some of the short-term solutions aren’t the best ones and might not be able to scale or provide the secure infrastructure for larger big box retailers.

Another argument is that the SIM or a Secure Element within the phone will bring equal security benefits to the EMV Chip in the physical card. Although this is true, the mobile wallet trend is in its extreme infancy. Card usage is certainly changing, with the advent of mPOS (mobile-point-of sale) technology leading to card acceptance possible in a diverse range of new environments. However, rather than being a battle between mobile and EMV, the likelihood is that we are moving towards a future where they will sit alongside each other. Consumer choice is a powerful master, and will lead to the development of point-of-sale terminals that will accept contact and contactless EMV cards as well as NFC mobile payments.

Consumer trust is a major driver when it comes to innovation in payments, which in turn hinges on security. As the United States continues its move to EMV, it is not only taking a crucial step towards reducing payment fraud, but laying the foundations for a new era in payment technology.  


We’re heading for perpetual change in the mobile payments landscape that we’ll see throughout our lifetimes. Technology is moving at such a rapid pace that there’ll always be innovation and that trend will continue upward. At the moment, it’s important to keep in mind that, although the technology is moving rapidly, many solutions fundamentally rely on a credit and debit card transactions. What we’ll continue to see are more efficient ways of moving money from an individual account into a merchant’s account. At the end of day, it’s about simplicity and cost.


Nowadays, when you think about a rapid transaction, cash is still probably the fastest way to pay unless you’re in a transportation environment. When you’re paying for a newspaper, coffee or dinner, cash is simple and easy. The industry as a whole will continue to look for ways to make other payment methods much faster and it’s exciting to see what’s next to challenge the technology landscape and ensure the solutions that are implemented can stand the test of time and adjust to our constantly changing landscape.

About Jeremy Gumbley

jeremy-gumbleyJeremy became CTO and technical director at CreditCall in 2001, having spearheaded the company’s technical development since 1999. He is a veteran of the payments industry, having driven product and technology development roadmaps to accommodate EMV migration programs in the UK, Europe, Africa and the Middle East as well as the US and Canada. As CTO, he is responsible for the design, development and implementation of the company’s market leading card payment solutions and portfolio of EMV Level 2 Kernels. Under his technical leadership, the company has licensed and deployed over one million Kernels in the last decade. In addition, Jeremy oversees the maintenance of the company’s PCI DSS Level 1 compliance.