Commentary
Mobile Payments Backed by Credit Cards? Not So Much
- by Chuck Martin , Staff Writer, March 22, 2013
The mobile payments space,
especially around mobile wallets, continues to get interesting.
Two separate pieces of news today give yet another indication of the complexities of some of the aspects of mobile payments.
The CEO of Visa told an audience at the Barclays Emerging Payments Forum essentially that the credit company sees charging transaction fees to wallet operators as logical. This echoes the coming MasterCard fees being added to PayPal, according to eBay.
The second piece of news is even more interesting with the credit card backdrop.
It turns out that the majority (62%) of Web purchases are paid by credit card but mobile payments are at the other extreme.
For mobile-based transactions, the majority (78%) of payments come from alternative payment methods, with credit card payments accounting for only 22 percent of transactions, according to a study of transactions across the commerce platform of Atlanta-based ShopVisible.
The largest mobile payment method was by PayPal, with almost half (46%) paying that way, and about a third (32%) paying by Amazon Payments.
There’s little doubt that consumers are increasingly using their phones to pay for various things, both digital and physical.
For example, the CEO of Starbucks told shareholders yesterday said that the coffee chain is seeing more than 3 million mobile transactions a week, about 10 percent of its total revenue take.
This also points out that mobile payments are hardly in the majority for payments overall, the same with some other mobile activities, such as in-store barcode scanning.
In the ShopVisible study, for example, only about a quarter of the tens of thousands of transactions measured came via mobile, the remainder from the Web.
But it seems obvious that more consumers will be paying using their phones.
All of this could lead to a new definition of what “charge it” means in mobile.
Chuck Martin is Editor of the AI & IoT Daily at MediaPost and writes the daily Connected Thinking column. He is a NY Times Business bestselling author and his latest book is “Digital Transformation 3.0” (The New Business-to-Consumer Connections of The Internet of Things.) He is CEO of Net Future Institute and a frequent keynote speaker internationally. Follow him on Twitter @chuckmartin and contact him at Chuck@MediaPost.com.
Every smartphone already has the hardware to send the data: a screen. All retailers need to do is buy a scanner that can be programmed to work with various payment options and they’re good to go. I could buy coffee with my Starbucks app (and Starbucks gets customer loyalty data), my Visa app (and I’d get cashback rewards), my online payday lender Canada app (if I wanted it to come out of my checking account) or my PayPal app (er, not sure why I’d choose this option, but it’s there if I wanted it).
Yes, Lisa, the phone screens can display codes, many very sharply, but the hardware and software at many retailers needs to be revised, as Starbucks did, installing new code readers in all its stores, as you point out. For some, though, this is expensive to integrate with current systems.