Guest Post on whether the world ready for mobile payments

by James Harrison, UK country manager with Oxygen8 Group

Recently, while working on an internal presentation, I ran out of room on a slide to show logos of rival mobile payment providers. This highlighted the fragmented space that we are all looking to compete in. It also highlighted a current lack of universal acceptance of what a mobile payment actually is and how and when consumers are prepared to use their mobile as a payment mechanism.

It leads to the question … Are we over-hyping the emergence of mobile payments?

Or do we just need to stop and rethink how mobile can be used and more importantly, what consumers are willing to embrace?

I don’t believe so, and I’ll explain why at the Payforit Summit, but we do need to work hard to show the benefits to consumers.

“Are we over-hyping the emergence of mobile payments?”

The comScore Digital Wallet Roadmap 2013 report indicated that the majority of consumers want a digital payment solution that works across all of their potential commerce channels such as online, in-app,  and physical store.

This means that currently, less than 10 per cent of US and European consumers are using mobile payments according to Mastercard.

The general consensus seems to be that mobile payments will only become truly mainstream when retailers adopt a common platform in stores.

Adoption in the physical retail environment has been very slow, because speed and convenience at point of sale for the retailer is King.

More to the point, merchants still haven’t been provided with a compelling commercial logic to embrace mobile or to update their EPOS systems.

Loyalty and reward schemes through mobile are great for driving footfall but payment itself is far from ubiquitous.

It’s still hard to beat the ingrained behaviour of the credit/debit card in these areas, and contactless innovations like ‘tap and go’ that utilise contactless technology on the actual card effectively play the same role an NFC-enabled mobile would.

To work in retail, what is needed is a better understanding of what works for retailers and consumers alike.

What works in e-commerce does not necessarily work in physical retail and vice versa.

If retailers can’t even get mobile payments working on their mobile site, what chance do they have of bringing mobile payments into more mainstream channels?

Mobile payment for digital goods or for purchasing something through the handset itself is more widely accepted.

Premium SMS has existed for a while and is widely accepted as a payment mechanism under appropriate circumstances.

It’s why schemes such as Payforit in the UK will continue to see growth for payment of digital goods.

Payforit specialises in areas where small amounts are billable directly to a mobile.

Gartner has produced a comprehensive report about mobile payments on a global scale.

It focuses mainly on the highest growth countries and has found that Asia-Pacific will likely overtake Africa by 2016.

What’s interesting is that it also found that NFC has not hit expected targets for uptake while mobile transfers have surpassed expectation.

In 2013, money transfers will account for 71 per cent of mobile transactions while NFC will only account for two per cent.

Ultimately any payments system, mobile or otherwise, has to be easily understood, accepted globally, as well as being convenient for the end-user.

These are major barriers, which have not been addressed despite the number of innovators working on new payment systems.

There is insufficient global scale currently, and adoption of payment systems is too fragmented to make a call on what will work globally.

Author biog

As UK country manager with Oxygen8 Group, James Harrison is speaking at the Payforit Summit, which takes place at 10-11 Carlton House Terrace on June 26th 2013. He is leading a session called ‘Creating new Payforit business models’.

GoMo News readers can attend the Payforit Summit for free by using the code GOMO100 when they sign up here.

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