The ability to pay for things and to monitor your payments through your mobile phone is a great step forward - or it will be when it becomes acceptable to a wide range of people. And this is the problem: the technology has been around for quite some time, but not enough people know about it or quite trust it yet.
A recent survey commissioned by Gemalto, for example, found 31 per cent of respondents didn’t know they could pay for items using their mobile phone and 34 per cent said they would not or didn’t use mobile payments because of security concerns.
“Increased communication to consumers about how the entire concept works and the security aspect is vital,” says Howard Berg, managing director of Gemalto UK. “Avoiding too much use of industry terms such as NFC [near-field communication], and focusing instead on the process and benefits will be another starting point. In addition, all parties involved need to collaborate by communicating how security is not compromised and is in fact no different to the use of a traditional bank card.”
There are different models by which these payments can be made to happen. Payment company Boku, for example, enables transactions to happen which then appear on a customer’s mobile bill. It’s easy to allow this to happen because the customer has only to remember his or her own mobile number, explains James Patmore, managing director Europe, the Middle East and Africa (EMEA).
“I’d describe it as an alternative mechanism to credit card or PayPal,” he says. “We have quite a few customers who operate in the digital space for digital rather than physical goods, including companies like Electronic Arts and Facebook.”
Avoiding too much use of industry terms such as NFC and focusing instead on the process and benefits will be a starting point
Consumers like it because of the absence of fuss. Mr Patmore suggests it appeals to some demographics more than others; the ones which understand that the SIM card in their phone has a lot of encryption will be comfortable with the idea and, of course, the Facebook generation is entirely comfortable paying this way. “They’re reluctant to take a whole range of payment options with them but they always have their phone and their keys with them when they leave the house,” he says.
This isn’t the only model. Paul Grill, partner at US firm First Annapolis, considers another: “Technology for the kind of mobile payments people refer to as near-field communication exists, but it’s not yet in enough handsets or with enough merchants. That’s going to be a longer lead time.” This is the idea by which a chip on the phone is recognised by a payment system so the customer can pay simply by being close to the terminal.
Mike Warriner, chief technology officer at Intelligent Environments, believes this will eventually wipe out the competition but agrees it won’t be yet. “That’s at least two or three years away,” he says. For the moment there are some e-wallets around attached to mobile phones but these won’t take off until they’re universal. At the moment, he says, you can stand in Starbucks or an O2 shop and use their “ecosystem”, but they need to be interchangeable.
Gabriel Hopkins, head of ecommerce at internet payment specialist WorldPay, says different tribes of smartphone users seem to be adopting mobile payments at different rates. “Ninety per cent of iPhone users browse goods on their phone and 50 per cent complete a purchase,” he says. “Only 53 per cent of the rest of the smartphone market browses goods, with 18 per cent completing a purchase.”
Educating the rest of the market is going to be a struggle. Richard Johnson, group strategy director at Monitise Group, has a more fundamental objection: the experience of shopping with a phone has to be better. “If we’re buying a can of Coke in a shop and you hand over your £1 and walk off with your purchase while I’m still fiddling with my phone, it’s not that great,” he says. People are getting around this with offers and other promotions but it’s got to be a bit more seamless longer term.
The thing is, there’s no one group that is taking full responsibility for driving this at the moment. Mobile companies have announced a steering group of sorts but this doesn’t involve the banks or merchants as yet. Meanwhile Google, Starbucks, O2 and others are pushing their own wallet standards, and the chances are it’s going to be a commercial imperative that makes real mobile commerce happen in the end.
