It looks like we’re all getting closer to being able to use mobile payment; up until now the opportunity to use this has been very niche but it now looks to be going main-stream. PayPal have predicted that within the next four years, by 2016, we’ll no longer need to carry around our wallets and purses when we go out shopping, as we’ll all be using our smartphones as a mobile wallet.
Visa, who also have an understandable interest in maintaining a stake in this market, predict that over 50% of its payments will be made by mobile phones by 2020 and it has been estimated by Juniper Research that mobile transactions in the retail sector could reach $1,700bn by 2017, which if achieved would account for 4% of the total global retail transactions. With so much potential to tap into, it’s understandable why so many companies are trying to get in on mobile technology and here’s what a few of the biggest have done so far.
The company were showcasing the technology at the London Olympics, where they estimated that around 15% of transactions under £20 were made using either a mobile device or a contactless card. On the whole, the technology worked well but IT problems at the Wembley Stadium during a football match did prevent the payments being made in this way, an issue that is certain to raise questions about its reliability.
This was launched last year and allows you to pay for items through your phone as well as allowing you to claim sales promotions too.
This is currently being developed by Verizon, T-Mobile USA and AT&T who are three of the leading telecoms operators in the United States.
PayPal have developed an app for smartphones that will allow its registered users to be able to pay for goods and services from a limited number of UK stores. The global company expect that the payments it receives through mobile phones will increase from four billion dollars last year to ten billion dollars this year.
Starbucks have a mobile app that will enable you to be able to pay for your lunch and drinks and with over one million of its customers using it every week it is one of the success stories to date. But when you look at that number in the context of everyone visiting Starbucks, it is still less than 2% of their total transactions.
This is a service that has been developed by Barclays and enables you to be able to make mobile to mobile cash transfers and has been up and running since earlier this year. The system is thought to be a good idea; however it is difficult and complicated to install which is why many people are thought to have stopped using it.
It is clear that mobile payment services is a dynamic and potentially lucrative business which is why there is such a diverse and fragmented range of development being undertaken. Banks currently act as the primary handler of payments and if mobile operators can remove the need for their services this will allow them to control and make money out of the transaction.
Retailers are also understandably nervous about the move to mobile payments as they do not want to find themselves having to pay heavy fees to be able to accept a new payment mechanism and neither do they want to have to invest in equipment and staff training to be able to accept a range of these payment methods.
This proliferation has been observed and commented upon by a partner of the management consulting company, Novantas who are based in the United States, Steve Ledford:
“The market won’t sustain more than a few of these services and so there will have to be a big shakeout……It is a safe bet that nine out of 10 of these will fail. The more difficult thing is knowing which ones.”
This development of a wide range of systems could lead to vast sums of investment being made with no guarantee of success, a fact that is being recognised both here in the UK and in the US where companies are now starting to work together on the technology. In the UK, we have the Mobile Money Network, which is a group of UK stores including, HMV, Thornton’s and CarPhone Warehouse who launched an instant mobile checkout back in November 2011 and are continuing their partnership to develop mobile services that will deliver the simplicity that consumers demand.
In the US, the Electronic Transactions Association has created a Mobile Payments Committee to attempt to coordinate the different mobile payment technologies and to put in place shared standards. There are some major players that have joined this committee including the four largest US mobile telecoms companies; Verizon, AT&T, T-Mobile USA and Sprint, along with Google, Visa, American Express, Capitol One, Mastercard, Wells Fargo, Paypal, Isis and Discover.
For the technology to succeed and stand out of the crowd, it will need to be simple, secure and easy to understand, otherwise there is a danger that consumers will become overwhelmed by the choice and decide to stick with their tried and tested payment methods that they have been using for years, and just pay with their existing credit and debit cards.