Commentary

Mobile Payments & the Large, Untapped Market

There are obviously many moving parts around mobile payments.

We’ve written quite a bit about the how to pay, using various forms of mobile payments. We’ve also addressed the issue of who people will pay, including credit card companies, banks and wireless carriers.

At last week’s MediaPost OMMA mCommerce conference, an interesting observation was made by one of the main speakers, Ken Moy, SVP, Group Head of Emerging Payments at MasterCard.

He noted that 85% of overall payments today are still by cash and check. This is the target universe of much of the mobile payments world.

While the frequent discussion at various mobile meetings is around why someone would use a mobile wallet rather than a credit card sort of misses the point in this context.

Moy also pointed out Gartner research showing that the overwhelming majority of most mobile payments today are person-to-person money transfers, with only 20% being done at retail a few years from now.

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Another market dynamic around mobile payments is the sheer volume. With many hundreds of mobile wallets in Apple’s App store alone, the landscape can look very confusing to many consumers.

Then there is NFC (Near field Communication), which can provide the ability to pay by swiping or tapping a phone at a payment terminal.

During the panel on mobile payments at the conference, one of the panelists referred to NFC as the worst thing that ever happened to mobile payments.

While NFC can be readily adapted to other activities, such as public transportation, it can tend to confuse the mobile payments issue when promoted just for that use. Not to mention, most people don’t yet have NFC built into their phones.

The global nature of mobile is another factor, with Moy pointing out that mobile means something different in each country.

One future idea suggested by a panelist is that mobile wallets will be private labeled. For example, IBM would have its own mobile payment capability for internal use by its employees.

In that scenario, there would be many ways to pay with the question remaining of who provides the payment capabilities and infrastructure behind the scenes.

Looks like we’ll be talking about the coming of mobile payments for some time.

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