Mobile Payments: Marching On

Leading up to the CTIA Wireless event in New Orleans last month, there was some anticipation around a potential update on the timing for widespread availability of a near-field communications (NFC) mobile payment deployment from Isis, the mobile payments joint venture between Verizon, AT&T and T-Mobile. Not surprisingly, it looks like we will have to wait a little bit longer to hear news about when we may actually start to see real progress in the availability of NFC.

But as we march ahead on the mobile-payments battlefield, we need to look beyond NFC and ask ourselves: “Who are the key industry players in the mobile commerce war? And are they doing enough to educate consumers about the service’s security features and their benefits?” The answer: Probably not.

There’s been a lot of chatter in the media about whether NFC could be the missing link the mobile-payments industry needs to achieve widespread adoption, but we’re not addressing the fact that mobile payments do exist without NFC and are widely adopted all over the world. Americans tend to have a limited view of the world, so let’s take a look at our own market. Here in the United States, the mobile payments ecosystem is disjointed. In fact, it’s a bit of a mess.

This year, we polled attendees at both Mobile World Congress in February and recently at CTIA to try and uncover what industry experts believe is holding mobile payments back. And in both cases, the overwhelming majority (76 percent and 71 percent, respectively) of respondents cited that perceived security threats and lack of coordination among key industry stakeholders are the main obstacles to widespread adoption of mobile payments.

Security isn’t a threat to mobile-payments adoption; it’s the perception that mobile payments are less secure than traditional payments. To date, the industry has failed to establish clear standards and ensure that everyone plays by the same rules.

Which players in the mobile payments industry are likely to succeed in facilitating widespread adoption of mobile payments? Almost half of our respondents at CTIA (47 percent) believe that financial service providers, such as the banks and credit-card companies, are most likely to succeed in driving adoption rates.

There’s a clear disconnect between the service mobile-payment players are trying to deliver and what consumers understand to be the value or benefit. Part of the problem with mobile payments in the United States today is that the credit-card system works. There’s no flaw with plastic payments as they are but, in order to entice consumers to engage in a new way of doing things, there must be an added benefit.

This year’s CTIA survey results reveal there’s still an unwillingness among consumers to pursue mobile-payment options. Right now, they’re not very optimistic the industry will be able to come together in the next year or so to deliver enough incentive to make mobile payments attractive enough.

NFC could very well become a universal standard, but it’s far from a sure thing; 84 percent of those polled at CTIA believe it’s still at least two to five years away. With all of the different providers looking to compete in the mobile-payments space, they will need to find a way to come together, interoperate and make life easier for the consumer.

Plastic payments won’t be eliminated, but the industry will need to facilitate an extension of payments beyond the credit card, giving consumers more options. And consumers won’t consider the mobile option until the industry works together to develop standards —  and that they understand the benefits. Until then, we’ll keep marching on.

Matthew Talbot is senior vice president/Mobile Commerce at Sybase 365. Contact him at [email protected].