The Value Of Mobile Payments Is Beyond Transactions
Source: Eric Savitz
Carl Tsukahara is the Chief Marketing Officer and Vice President of Products at Clairmail, a mobile banking and payments provider.
In 2011, the mobile payments space had a wild ride:
Verizon blocked Google Wallet from the newest flagship phone of Android, the Galaxy Nexus, no doubt in support of Verizon’s own payments initiative with AT&T, T-Mobile and Discover called Isis.
PayPal was rumored to preparing its own mobile wallet service.
Square fundamentally changed its still-new model of transactions by introducing a mobile payments system that centers on the consumer-merchant relationship rather than the payment itself.
All of this comes at a time when there is no single standard for new mobile payments technology. Isis and Google are backing conflicting versions of the same technology (Near Field Communications, or NFC), and equally significant players like PayPal are going entirely different directions with cloud-based (rather than hardware-based) mobile payment initiatives. Square and Intuit have circumvented the traditional payments network with their own respective additions to the transactional process (Square’s reader and Intuit’s GoPayment device).
For all the hype around this fast-evolving space, there are a myriad of options out there and the move to mass adoption, while getting closer, is still far off. It’s anyone’s game, but there are a handful of companies �C many of which are mentioned above �C taking steps in the right direction by conveying why mobile payments matter.
In all this, there are three major factors of the mobile payments equation that remain unresolved and largely unstated:
The value of mobile payments is beyond the transaction.
The method, delivery and implementation of mobile payments will be decided by merchants reliant on attracting buyers and driving loyalty, while optimizing checkout.
There are still significant issues in finalizing changes in the “value triangle” between consumers, banks/payment service providers, mobile network operators, and merchants.
There’s a common thread between these points: there has to be something fundamentally changed about the current point of sale model in order for mobile payments to take off.
It’s about added value and convenience to the consumer, and the ability to drive more customers, loyalty, efficiency and lower risk for the merchant and banks and operators involved in the payments process. Think of contactless “tap and pay” credit cards �C you may have one in your wallet right now, but you still swipe it anywhere you go. As a consumer, there’s nothing more convenient or inherently better about tapping your card vs. swiping your card if all that matters is making the payment. Would the time spent setting up and configuring a “mobile wallet” be worth it if the only difference at the cash register of Macy’s is that you wave a phone over a terminal rather than swipe a card through one? Doubtful.
This is what new solutions like Google Wallet and Isis �C alongside a slew of others �C are attempting to navigate. For Google, their Wallet initiative is centered on data and closing the “point of transaction” gap to complement their search business. Checkout products attempt to bridge this exact gap for the online/e-commerce world, and Google is working to convey the value and massive opportunity of the mobile wallet to consumers and merchants alike in order to capture the data and revenue stemming from transaction-based mobile marketing. For the carriers involved in Isis, it’s about helping carriers stay relevant to consumers and claiming a percentage of the transactional data flowing through their networks instead of becoming a “dumb pipe”.
Regardless of their differences in hardware approach, Google Wallet and Isis each are beginning to show promise in delivering something for consumers and merchants alike that shifts the focus from whether users are swiping, waving or tapping when checking out to the services delivered on top of the payment itself.
So what might these actual services look like? In the next two years, expect to see the following worked into your mobile banking, payment and ultimately “wallet” applications:
Deals and offers: Highly targeted, relevant offers based on prior buying patterns and current location. Imagine receiving a time-sensitive text message or in-app alert with a coupon to your favorite electronics store after your digital wallet “checks in” that you are within the store.
Digital receipts and account information updated in real time to give a comprehensive view of personal and linked accounts while also displaying loyalty rewards status.
Real-time, customizable alerts to certify that the purchases being made in an account are valid, based on your phone’s proximity to where the purchase is being made.
Google Wallet is the first mobile payments service to really show promise in adding capabilities like the above on top of a base payment platform by bringing their ecosystem of local services like Google Places and Offers into the fold. The other major mobile wallet contenders, like Isis and PayPal, are playing catch up in more closely aligning themselves with merchants and consumers than with their own stakeholders.
Nowhere in the above scenarios are the payment processing details (NFC v. cloud, SIM v. native) mentioned for one simple reason: the average consumer (and merchant) probably doesn’t care, as long as they believe that it is easy to use, secure, and brings more value than just “the payment.” With research beginning to show a major shift in consumer sentiment towards mobile payments, 2012 will be the year the race for the mobile wallet really starts―but don’t expect it to be the year it finishes.
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