The concept of making a payment with a smart phone sounds very logical and conversationally appealing. We send text messages, share photos, check-in, buy things online and save travel itineraries with these devices. So why not use it as a wallet too? It would be great to have to carry one last thing in our pockets.
I think the CONCEPT of doing this makes sense to millions of consumers…but the reality is that it’s not happening as quickly as technology analysts or consumers predicted. An eMarketer report predicts that mobile payments in the United States will cross the $1 billion threshold this year, which is a number far less than previously estimated.
This slower adoption rate reminds me of the slow broadband Internet adoption in the late 1990s. I worked at Excite@Home and we promised to deliver high speed Internet access and robust content worthy of broadband to millions of homes and small businesses across the US. I still have a t-shirt that says “broadband access, across all devices, all the time.” How cool was that promise!? I expected to have this big pipe Internet connection into my home by the end of 2000. What happened?
Similar to mobile payments, broadband Internet access was thwarted by multiple providers, convoluted access points and technologies. It took a while for the cable networks to decouple from Excite@Home and offer broadband themselves. DSL Internet providers slowly gained momentum to provide similar services, but not without a fight with telephony providers who controlled the coveted “last mile.”
Many of these technical and business challenges are faced by the mobile payments industry. A single mobile payment system has yet to emerge as a clear leader for consumers. Making things more complex, no mobile payments system has emerged as a solution for small business to accept mobile payments. With such confusion, business owners will be reluctant replace their POS card readers with a slick payment system that runs on an iPad. Investors will also continue to be cautious as indicated by Capital One pulling out of its investment in Isis.
So, what to do? Consumers and small businesses will need to take a wait and see approach. Consumers will continue to make payments using a credit card, debit card or cash. But until a provider can develop a payments system easily adopted by small businesses, consumers will stick to only making mobile payments to buy their Starbucks coffee.