I read practically the same breathless pronouncements last year, and the year before. But the reality is that my half-dozen credit cards from the major banks all still have the same 60-year-old technology. I still sign my name to flimsy pieces of paper three or four times a day. I have a Paypal account, which simply dumps every transaction to my VISA card, meaning that both companies take a bite out of the poor merchant's payment.
The problem is that there is very little added benefit for the consumer. Most of these things are just another gimmick. A Paypal-issued card? How is that any different than just another credit card? Telephone number and PIN? No different than a "card not swiped" transaction. The use cases haven't really changed.
The one use case that *is* different is the stored value card, but this faces some big hurdles in the US. Not the least of which is that the US government is never happy with any form of anonymous currency mechanisms ...
SAN FRANCISCO — Mobile payments is a hot topic at the moment, but there’s actually quite little going on in comparison when it comes to actual activity. There are hardly any smartphones enabled with NFC technology, nor are most of the digital wallet programs set up and running extensively yet.
However, this field is expected to rapidly change within in the next year, according to a group of panelists assembled at GigaOM’s Mobilize 2011 conference in San Francisco on Monday afternoon. The mobile payments spectrum could (and should) look vastly different at this time in 2012.
“We think 2012 will be a transitional year for mobile payments,” said Brad Greene, a senior business leader at Visa, “What we mean by that is that it will finally be the year to move beyond pilots and trials into real, full-blown commercial deployments.” He acknowledged that it will still take merchants to adopt to this new way of paying for purchases.
That shouldn’t come as much of a surprise. Not only are technology upgrades usually expensive — especially for small businesses — but this isn’t the first time that many merchants have come in contact with mobile payment systems.
Laura Chambers, senior director of PayPal Mobile, warned that merchants have already been burned by the experience of paying for terminals to support NFC chips on credit cards, and so far barely anyone is actually using them nationwide.
While Chambers acknowledged that NFC is a “great technology,” mobile payments is already happening really quickly. Thus, PayPal isn’t waiting around for three to five years for that medium to grow but rather it is setting up its own platform announced earlier this month, which is tied to its existing 100 million active online accounts. Users will be able to either swipe PayPal-issued cards or enter their phone number with pin numbers for payment completion.
“We found that it’s important to have a solution that is broad and flexible,” Chambers said, adding that “trying to push something new on to them was not going to work.”
Nevertheless, NFC did find some support from panelists. Dave Talach, vice president of global product management at VeriFone, affirmed that he loves NFC because of the frictionless and seamless experience it offers customers as it enables the possibility to pay, utilize coupons, earn loyalty points and more all with a single click — thus creating a unique experience tailored to each consumer.
Talach added that one of the issues about mobile payments is that the payment process in general is an “experience that we’ve had for so many years,” which has not evolved in the way that telephones and computers have.
“The challenge is the entrenched leader right now is cash or plastic, which only takes about two seconds [to process],” said Ken Miller, vice president of risk at Intuit, “You have to come up with something that is as good or better to be able to get mass consumer and merchant adoption.”
Miller posited that NFC is one of the best bets in this field, but there are room for other solutions as well.
In the end, it’s really about producing a solution that is secure and convenient for both the consumer and the seller more than anything else. Chambers argued that for merchants, this means creating something focused on the way they already do business, and consumers care about flexibility as well as value when it comes to payment options.
“You have to make sure you’re continuing to do everything you’re already doing that works for the consumer,” Greene added, “If you can sort of nail those things that are generally already in place, and then layer on all these new features and functions, I’m pretty confident that consumers would embrace it.”
