Changing habits will drive Mobile Payments Acceptance

The recent news that Isis, the  joint venture between AT&T Mobility, Verizon Mobile and T-Mobile and Discover is abandoning its pursuit of creating a mobile payments network and instead will focus on developing a basic mobile wallet, got me thinking.

Is a mobile wallet/mobile payments option more compelling or easier than using the traditional swipe of a card? Or easier than to pay with cash?  Am I comfortable keeping all my financial data in one place for the world to see if data is hacked?  If not, a mobile payment option doesn’t have a chance.  It takes a lot to change the way we do things, and if the alternatives don’t add value, don't 'feel secure' then there’s little to no reason to do it.

Sure there are the early adopters of technology. The hip and ‘in’ crowd who are the first to try everything new.  But remember, the average Smartphone still costs an arm and leg or at least a couple hundred dollars, add to that the cost for a data package and then a calling plan and you can be paying an additional $50 and $120 a month. And while there are millions upon millions of Smartphones in use today, there are also millions upon millions of people who still use a regular cellphone, and still millions more who don’t use either.

So what about those people who don’t carry a Smartphone on their person? How will they make purchases?

And while I believe mobile payments and contactless payments is probably the wave of the future, I still see acceptance of this technology being a few years away. The two main factors that I see standing between everyday use of this technology and non-acceptance is the cost of upgrading payment systems and card terminals at the merchant level, and changing the way consumers buy.

Well, there are people, too numerous to count, who prefer paying with cash to avoid getting themselves into debt. Others would rather swipe their credit or debit card when making purchases. No need to carry a bulky Smartphone to buy that morning cup of coffee, when a flat dollar bill or two will do.

And then there are the costs associated with mobile payments on the merchant. Merchants would also need to purchase new NFC enabled terminals.  A regular credit card terminal sells for about $200, with NFC technology inside the cost of doing business for that merchant just went up. If it's not broken, why incur more costs? It’s a chicken and an egg situation; upgrade the infrastructure or wait until customers want to wave and pay.

About 15 years ago we heard the Internet would change the way we live our lives; how we purchased our clothes, our electronics, and how we received daily news, etc. We were skeptical at the time, said it would never happen because people were not comfortable doing things in 'cyber space' and too set in their ways of either shopping in the store or picking up the morning paper on their way to work.  We now know differently.

Old habits die hard. And I expect to see NFC technology take hold in this country, but we’re looking at a longer acceptance period – maybe as long as 2-4 years. I once thought the hardest part of this transition would be the cost to merchants to upgrade their terminals, but the more I think about it the more I conclude that the hardest part might be getting a critical mass of consumers to think of paying in a new way, with new technology. 

For the mobile wallet to add value and gain acceptance, we must bring value to the application, and not with just NFC, but with value added services that have meaning to the consumer. We need to get mass-adoption at the consumer level to drive the merchants to upgrade to accept wave and pay.  Stay tuned for more on mobile wallets, NFC technology and value-added services.