Quo Vadis: Mobile Payments?

Quo Vadis: Mobile Payments? image Mobile Payments Money of the Future.jpgQuo Vadis: Mobile Payments?Mobile Payments are supposed to be “the next big thing” in the digital world, as German tech-news portal “Heise” puts it. However, a recent Gartner study unveils adoption is lagging behind expectations. Estimates suggest by 2017 450 million users will gross a revenue of US$ 721 billion, 3x today’s volume. Let’s put that in perspective: 450 million users represent only 6% of the world’s population. This number compares to 50% of the worlds population being online by 2017, according to Forrester. Why are adoption estimates so low?

A bajillion players and technologies

“With calls, we won’t make any money in the future. Data is becoming more relevant and payment data will be king”, says a rep of Teléfonica. All big telecoms corporations have announced or already introduced mobile wallets. Adding to the telecoms solutions are those of credit card companies. Visa aims to have 50% of all its transactions from mobile origin by 2020 in Europe. Next, the corporations behind mobile operating systems like Google are aiming on implementing native payment solutions for smartphone owners. And, lastly, retailers come up with their own payment apps. However, a pilot by German retailer Netto unveils the flaws of this system: On average, daily supplies of a household are bought from 9 stores. As users don’t want to have dozens of payment apps on their phones, adoption rates are behind expectations.

Consumers think: “How is this any better than my credit card?”

This highly fragmented landscape of mobile payment solutions hinders adoption by end-users. Certainly, just as it is the case with any new technology, think Blu-ray vs. HD DVD or power for electric cars – standards are a necessary facilitator for adoption. Also, consumers miss added value from using mobile payment. Market players often mention convenience – but fairly, paying with your credit card is not really any less convenient. Hence, integrating loyalty cards into mobile payment solutions can be a way to go. Target, an American retailer, can tell a good anecdote on this: They got in serious trouble when a father of an underage girl was complaining why his daughter is getting coupons for cribs and baby clothes. The trick: Target knew she was pregnant before her parents did, because of earlier purchases.

What needs to happen next?

  • First, consolidation of the market is needed for serious adoption. Retailers seeking cooperation with smartphone operating system providers or telecoms can team up to build standards.
  • Second, retailers can then individually insert their loyalty programs as modules. Also, this will make conventional loyalty cards obsolete at a later point and help drive mobile payment adoption of such card-lovers.
  • And third, a serious ramp-up of Point-of-Sale infrastructure is needed, including training for employees.

Nevertheless, players are launching their cluttered landscape of solutions only now. Without an easy and unified infrastructure, mobile payment could be just a doomed hype. Photo Credits: ModernDignity.com

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