Mobile Payments, What Will it Take?
Mobile payment growth hasn't blown anyone away for a few key reasons, according to a recent study by Gartner Group, reported by Clickz here:
1) Service providers haven't adapted strategies to local requirements
2) NFC (near-field communication), the primary technology for facilitating mobile payments, is proving more complex than expected.
3) Consumers are just not warming up to it.
Sandy Shen, from the Gartner Group, predicts that mass market adoption of NFC is four years away, citing the biggest hurdle for mobile payment is "convincing consumers."
So, what does this mean for American Express, Google (who recently acquired Punched), Apple, PayPal, Cimbal, Sparkbase, Dwolla - all looking to make mobile payments the preferred way to pay?
First, I would like to question that consumer leeriness is the hang-up. My guess - people just don't know about mobile wallets.
As evidence that awareness is the problem, I went to the Apple Store to gauge quantity and response for mobile wallet applications.
Cimbal: Free, Released August 11, 2010. Approaching it's one-year anniversary it has a whopping 2 reviews, on of which is clearly from an employee.
PayPal: 4.99, Released June 30, 2011. It has 199 ratings, with 95 of them giving it 1 star. Still the volume of ratings shows that people were aware the application was available. Two negative reviews cited errors with the "Virtual Terminal," which is specifically for small businesses.
Punchd: Free, Released Feb. 17, 2011. 6 ratings, 4 are positive. Loyalty punch cards on your phone - I like their style and voice. Very conversational, but not a lot of awareness on the App Store.
Dwolla: Free, Released July 5, 2011. 23 ratings with 16 5 stars. Pretty impressive. I also noted that the suggested apps were also pretty high-brow including Square (another mobile payments acceptance app for small businesses), Bloomberg and Pageonce.
Sparkbase: Currently Available in Chicago, IL. No ratings.
Then, I downloaded Starbucks' mobile pay app. Free, 86 ratings, 59 of which were 5 stars. So, the most successful mobile payment option came from a retailer as opposed to cross-retail application. I don't think this means cross-retail apps are doomed, but I do think it points to what apps have to do to be successful. Mobile wallet apps need to make themselves an easy option at the point-of-sale. This means building meaningful relationships with their retailers that motivates them to get the word out about mobile payments and loyalty programs in-store.
The two mobile wallet applications that had some response, PayPal and Dwolla, both also showed signs that downloads, or at least vocal downloaders, came from small businesses, not consumers.
Consumers are the key. Who ever makes it a known, easy-to-use option for consumers, will earn the most market share in the mobile payment and loyalty space.