Commentary

The Road Ahead for Mobile Payments

There obviously are multiple issues around the mobile payments, many dealing with consumer adoption.

Last night, I got to participate in a one-hour Twitter chat dealing with some of the specifics relating to opportunities and impediments around forward movement.

In on the chat were John Tuders, Senior Vice President, Product & Payments Innovation Executive at Bank of America, and Ken Moy, Group Senior Vice President of Emerging Payments at MasterCard Worldwide, the two entities that organized the chat, moderated by Todd Wasserman, Mashable’s business editor.

Overall, I came away with the impression there’s still quite a ways to go for mobile payments, though many of the ‘attendees’ who asked questions or added comments were quite up to speed on the topic.

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There were several major issues addressed during the chat, so here’s my take on the highlights around mobile payments, by subject:

On why a consumer would pay by phone rather than a card or cash

Bank of America acknowledged that “plastic isn’t broken and cash works just fine” and that adoption will take off when wallets provide real value or solve a problem for customers. MasterCard pointed out that consumers are moving to digital lifestyles and that mobile devices are in the center of the change.  Tuders noted one of the reasons is the difference between a static magnetic swipe vs. the dynamic nature of the digital experience.

NFC (Near Field Communication) adoption

NFC being adopted at big box retailers will depend on the economics to the merchant, said Bank of America’s Tuders, who said that regarding NFC or QR codes, the bank is “agnostic about the technology.”

Innovation

Moy pointed to MasterCard’s MasterPass and digital payment platform as fast and convenient while Tuders noted that customers have three non-negotiables: “merchant adoption, consistently works and high security.” He also said the bank has learned that just replacing a swipe with a phone tap isn’t enough to convince consumers to switch.

The shopper of the future

Will include everyone, even those with no current access, said Moy. Tuders said it’s still too early to tell and they’re still assessing what the customer wants their payment experience to be. Moy pointed to a MasterCard analysis of 85,000 social conversations that showed consumers want to use smartphones to shop.

Security

This is the topic that comes up in virtually any mobile payment discussion, even though financial institutions have pretty well mastered the issue over a period of decades. It’s in their DNA. “Customers have told us customization of security features like passwords and pins ins an important aspect for them,” said Tuders.

When mobile payments go main stream

“Consumers are confused and concerned about the range of choices,” said Moy. “These concerns include security, customer support and acceptance. We need to de-mystify the concerns around mobile payments to get to main stream.” Tuders said it goes main stream when there’s a business model that retailer and banks can get behind  “and when there’ s a compelling enough use case to incent customers to change their behavior beyond the payment.”

When the technology filters to mom and pop businesses

Tudors said customers have told them that a wallet needs to work everywhere they shop. “This is critical.” Moy said “consumer demand, competition and lower costs will ultimately drive adoption. Mobile is creating new opportunities for small businesses today in the form of mobile POS” and cited LevelUp as one example. Tuders said small businesses are looking for solutions that don’t require capital outlay to implement. Moy sees mobile payment as a way for small businesses to differentiate themselves while Tuders said the technology would have to be straightforward to use.

If nothing else, the conversation shows there’s still some distance to go before wide-spread adoption of mobile payments but some of the major financial entities involved have their eyes wide open about it.

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4 comments about "The Road Ahead for Mobile Payments".
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  1. Jason Gross from VeriFone Media, May 9, 2013 at 3:16 p.m.

    I think the discussion of when consumers will adopt mobile wallets has it backwards. Many consumers are already comfortable making "online" purchases though their phones. We don't focus on this as some massively disruptive change requiring consumers to reflect on why they will or will not do so.

    When these consumers open their Macy's app in a brick and mortar store to shop, and simply tap it at the checkout counter to pay and apply their coupons, that will be mobile payments. It will rely upon a mobile wallet platform that works behind many retailers' apps, but the wallet will be invisible to them. The trust will be with the merchant, much like it is when they swipe a card today. The ubiquity will be inherent in the fact that payments through the merchant's app is accepted in the merchant's stores - not much of a stretch.

    The idea that mobile payments is the beginning of a consumer experience through a dedicated "wallet" app is an option, but probably not the one that will drive initial adoption of mobile payments. I think Starbucks has gone a long way to proving this already.

  2. Chuck Martin from Chuck Martin, May 9, 2013 at 3:40 p.m.

    Thanks Jason, you make several great points here. The idea of contactless payments was the focus last night but yes, consumers for years have been conditioned to purchase digitally so you could be right that it will not be such a major transition. Starbucks also has the loyalty factor going for them.

  3. Paula Lynn from Who Else Unlimited, May 9, 2013 at 4:03 p.m.

    Besides like pocket dialing, pocket buying may be treacherous....Those little squares for cell phones that take credit cards could be on the march in more remote parts of the world especially if the transaction costs come down to where the small merchants who sell to tourists can sell more with a very small cost. A hundred dollar profit per week keeps families afloat.

  4. Chuck Martin from Chuck Martin, May 9, 2013 at 4:09 p.m.

    Yes, Paula, and in some of those countries a full-featured phone is their first access to the net.

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