Windows Phone left out as Google Wallet swallows Softcard

Google purchased Softcard earlier this week, and today it posted a support page about what to expect from the mobile wallet service in the future as it shuts down. No surprises here: Android users should download Google Wallet, which is replacing Softcard. But for users of the Windows Phone Softcard app, there is no NFC payment alternative.

From the FAQ:

What about Softcard for Windows?
The Softcard for Windows Phone app will also be terminated. A specific termination date will be provided soon.

Softcard for Windows Phone, we hardly knew you. The app first launched on Microsoft mobile devices last fall for AT&T and Verizon subscribers, and allows users with NFC-equipped Windows Phones to make contactless payments at certain stores and restaurants, including McDonalds. Because Windows Phones aren’t equipped with fingerprint readers yet, users have to enter a PIN to unlock the digital wallet.

softcard windows phone

When Softcard exits the Windows Phone store, it leaves the platform without a NFC-enabled payments app. Microsoft Wallet can theoretically make NFC payments, but its acceptance has been slow, possibly due to resistance from the carriers (who were committed to Softcard.) Android devices can download Google Wallet, obviously, and Apple’s iPhones have Apple Pay. The Softcard FAQ doesn’t mention Softcard on iPhone, but the plans to enable Softcard on the iPhone using an “integrated secure SIM-based hardware solution” (an NFC-enabled iPhone sleeve) are probably on the back-burner, too.

The decision to pull the Windows Phone Softcard app might not be a snub intended to hurt Windows Phone. It’s possible that Google has simply decided that the relatively few Windows Phone users weren’t worth the extra resources to support the platform. Plus, Google Wallet could end up going cross-platform in the future. But it’s still an example of how Microsoft’s inability to gain traction with its mobile operating system is closing doors for its users, as well as for Microsoft itself in the rapidly heating-up mobile payments market.


Apple Pay – Forecasting consumer Adoption

For several years, mobile payments in physical locations has been stalled here in the U.S. and – for the most part – around the world. Will Apple Pay become the spark for consumer adoption of mobile payments at retail outlets?

My short answer – not until mid to late 2016.

Here’s why:

  • Minimal market penetration of iPhone 6 and Apple Watch Part one of the formula for Apple Pay market adoption is to understand how many Apple Pay-capable devices will be in the hands of U.S. consumers in 2015. Only iPhone 6 devices will be able to make physical location payments. According to Comscore, 167.9 million Americans owned a smartphone in early 2014, 69.5 million of them iPhone users. Assume most iPhone 6 users are replacing older iPhones. Smartphone turnover for U.S. is running around 18-24 months, so let’s say at best, there will be just over 20 million iPhone 6 users in the U.S. at the end of 2015 (30% of all iPhone users). Piper Jaffray is forecasting Apple will sell between 5-10 million Apple Watches globally in 2015. If will assume half of those will be sold in the U.S., this means the total number of U.S. consumers with Apple Pay (physical location)-capable devices in their hands at the end of 2015 will be about 25 million. Let’s generously assume that 70% of them will be active users at the end of 2015 – 18.9 million. There are about 205 million adult Americans, so the likely number of Apple Pay users at the end of 2015 will be just over 9% of adult Americans.
  • Minimal market penetration of contactless payment terminals. Analysts estimate that only 10-20% of U.S. merchants currently have contactless terminals, which are required for Apple Pay or other contactless payments to work. Help is on the way in the form of a mandate for Visa-accepting merchants to have EMV/contactless payment terminals in place by October 2015.  However, the American Bankers Association believes only 50% of U.S. retailers will by compliant by the October 2015 deadline, and not all contactless payment-capable merchants will be an Apple Pay merchant. That requires a specific agreement directly with Apple.
  • For contactless payments, some merchants are more important. To spur market adoption, it’s not the total number of merchants who are capable that is most important. It has to be the right kind of merchant, which is one that handles a lot of everyday purchases – groceries, convenience stores, gas stations and fast food. It is also important for Apple and other mobile wallet players to court the merchants with the most retail outlets, which creates greater impact for a given amount of effort. Apple has secured agreements with three of the top 10 retailers as ranked by total number of retail outlets (Subway at #1, McDonald’s at #3 and Walgreens at #7), however, franchise-heavy retailers such as Subway and McDonald’s may not have as much say in whether the franchisee installs contactless terminals. Key players Apple should pursue to drive consumer adoption include Yum Brands (Taco Bell, KFC, Pizza Hut), Starbucks, 7-11, Burger King and Wendy’s. Mobile wallet players can drive consumer adoption by securing contactless payment commitments from the top 12 retail players (ranked by number of locations). Those 12 represent 50% of the total retail outlets of the top 100 U.S. retailers.

By mid to late 2016, Apple’s replacement cycle of iPhone 6 and forthcoming Apple Watch numbers will bring significant momentum to the marketplace in terms of consumers with Apple Pay-capable devices in hand. This should help spur merchant adoption of contactless terminals and create a symbiotic relationship for mass market adoption of Apple Pay, and perhaps Google Wallet and Softcard as well.