Mobile Payment: The solution to what problem exactly?

by Matt Klassen on October 23, 2012

There’s no question that a lot of hype has been generated about the ongoing mobile payment revolution over this past year, but with the glacial pace of the roll-out of this paradigm altering payment system many are starting to wonder what all the hype is about anyways, with initial consumer interest quickly turning into all out apathy.

In fact, having squandered all initial consumer interest in mobile payment technology, it seems strange on the face of it for companies, banks, and credit cards institutions to still be talking about the revolution like it’s the best thing since sliced bread.

But truth be told, it’s not hard to find the financial benefits of establishing one’s own mobile payment system, no doubt the impetus behind the proliferation of competing platforms. What’s a little more difficult to determine is how these companies should go about convincing consumers that mobile payment really does have its advantages, as the average person sees little reason to exchange their cash or plastic for their phone.

As I said, it’s not hard to find the primary financial benefit of establishing a mobile payment platform for banks and businesses: it cuts out the credit card middleman. Companies like Google have created the mobile wallet in an effort to horn in on traditional credit card territory, while brick and mortar businesses like Wal-Mart and Target are interested in their own personal platforms in an effort to stop interchange fees charged by said credit card companies.

For their part, financial institutions are interested in creating their own mobile payment systems in an effort to get a bigger slice of transaction fees, while credit card companies themselves are desperately trying to get their own mobile payment systems in place so they’re no left out in the cold.

Of course with such a gross proliferation of mobile payment technology it really comes as no surprise that the greatest stumbling block for the revolution is consumer adoption. For consumers, its hard to get interested in a new payment solution when the first step in the changeover process is choosing from a myriad of confusing, half-cocked options, none of which that would strike the average consumer as a sure-fire winner in this mobile payment race.

Simply put, while companies clamour to find ways to create a dominant mobile payment system, they are missing out on one key element for success: giving average consumers a distinctly good reason to swipe their phones or scan a smartphone app instead of pulling out their credit cards.

Now adoption issues are nothing new to the mobile payment revolution, in fact it’s the issue that drove Nokia to scuttle its first such attempt way back in 2006. The problem, it seems, is that mobile payment technology is not a necessity, simply one of those niche novelties that might appeal to small group of technophiles. For consumers, reaching for one’s phone is about as much work as reaching for one’s credit card, and we’re all used to doing the latter, so why change?

While analysts are expecting the proliferation of mobile payment platforms to continue to grow, with start-ups entering the market daily, in a race that is clearly not motivated by consumer need its becoming more and more difficult to see this revolution finding the traction it needs to be successful. Only when the myriad of mobile players start to look to consolidating their efforts will this movement have any chance of…well, moving.

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Written by: Matt Klassen. Follow by: RSS, Twitter, Facebook, or YouTube.

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