More than half of American cell phone users now have smartphones (per Pew Research Center, via The Verge). Though most people are aware that they can use their phones to make a payment, board a plane or gain admission to a movie, it’s clear that we have a long way to go toward true consumer understanding and acceptance of Mobile Payments. It will take more education, a shift in consumer behavior, and a common infrastructure for mobile payments before the concept is universally accepted.
The Mobile Wallet
Today only one-quarter of Americans are comfortable using a mobile app that would store credit card information, allowing them to make purchases at a retailer or business as they would with a credit card, according to a recent Harris Interactive poll. But it’s interesting to me just how many forms of electronic payment there are, and how simple they are to use — from my desk or my smartphone. I can store my credit card for use with a merchant, use electronic bill pay or peer-to-peer payment networks. There are QR and barcode readers tied to my credit card as well as a Premium SMS initiative that bills purchases or donations directly to my phone bill. At “Bricks and Mortar” establishments there are Google Wallet-type services and geo-fencing services just around the corner.
Millions of people conduct billions of dollars in e-commerce each year — with more than $35 billion spent during the 2011 holiday season according to ComScore. We freely link our credit cards to the Apple iStore and Amazon.com. So many people are comfortable downloading music to their iPhones and e-books to their tablets. So why do 90% of the people I ask tell me that they have not used mobile payments? Where is the disconnect?
They are thinking of the futuristic idea of swiping your phone instead of a credit card — what is called a mobile wallet. The hurdles are high for consumers to embrace the mobile wallet concept — but certainly not insurmountable. First and foremost, security must be addressed to educate consumers and to limit fraud. A mobile wallet will actually be more secure than traditional credit cards! Second, behavior must change — people must have a compelling reason to change their habits (beyond “You won’t need to carry your wallet anymore”) and the industry must clearly communicate these reasons to consumers.
When I look at the future of mobile payment, here’s what I see. What if when you entered a store, the business and its suppliers alerted you to where to find the items you seek and where you might be able to save money (much as Amazon does today when recommending a book)? What if you could scan a code in a store and buy it all securely from your phone? Stop and Shop grocery chain is three-quarters of the way there — they provide the ability for you to check out each of your items as you walk through the store, using your smart phone. A natural extension of that convenience is the ability to pay with your phone. For consumers, the technology is there, but behavior must converge with technology for one convenient, secure, uniform experience to be possible.
We stand today at a crossroads. Today’s technology capabilities are outpacing consumer behavior. Though many of us will wait hours in line for the latest iPhone or iPad we still don’t take full advantage of the convenience, time-savings and environmental benefits of mobile payments. Consumers have to adopt and merchants have to offer a mobile payment alternative. If the Merchant can’t take your mobile payment, you are both out of luck. So think about how you will use mobile payments in the future. It’s not far off.