John Campbell, head of mobile at Precedent, looks at what stage we have reached in the developing world of mobile payments, and explains why using your mobile as a wallet will be a game changer by 2013.
We all have a relationship with our mobile phones, and for many it is verging on a love affair: but are we ready to accept our phones as our wallets, using them to pay for goods and services, replacing cash and cards to carry out banking transactions and transfer money between friends and family? Is technology ready to provide an optimised and secure experience? Looking at this as someone married to his phone both personally and professionally, there are a couple of questions I need to ask first:
- If I was on a busy train, would I be happy to transfer money from my bank account? – Do I trust the provider?
- Is it going to speed things up? – Is it usable, convenient and useful?
The answers are different depending on the perspective of the part of me that is asking the questions. From a provider’s viewpoint I need to look at what stage we have reached in the progressive world of mobile payments and what the future holds in order to make a decision. From a personal perspective I need to be assured that my time invested in the technology will be rewarded. Trust
PayPal, a recognised brand, has led the way in getting us to use the phone to pay for goods and to transfer money. With the release of its app it has supported the ability to connect a PayPal account to my bank account and credit card, and enabled me to pay for goods online. So successful has it been that in 2011 PayPal saw its mobile payments reach $4 billion, a fivefold increase above expectation from 2010. During 2012 there will continue to be trials and tests of new hardware and software solutions. Companies such as Accumulate in Sweden are currently showing a progressive approach with several initiatives underway working with PayPal 3.0, so this is a company to watch. However, making the most industry noise is Google Wallet, another accepted name, which announced in 2011 that it is enabling me to use my phone as a virtual wallet by connecting my credit card to my phone. This then stores the relevant card information securely and the phone can be used on wave and pay readers to instantly pay for goods. Google Wallet is most definitely one I will be watching in 2012. I’m also watching two other interesting technology developments worth highlighting. Firstly, Squareup with its Cardcase software product has introduced a regular purchase/tab based selling process which needs no special hardware. With an app users can pay for a product in a retail outlet using only their name. If, for instance, you like to pick up a coffee on your way to work, you order it on your phone app as you near the outlet and when you arrive the coffee will be waiting; just give your name and it will charged to your account. A photo of you held on the retailer’s side helps support the validity of the purchase. Secondly, and this time from the perspective of any retailer wanting to accept card payments, the company iZettle has produced a practical app which works with a small chip card reader. The reader physically plugs in and enables any iPhone to process credit cards easily and cheaply. This opens up opportunities for any merchant to accept credit card transactions on the spot avoiding waiting for payment through the post, or stallholders sending desperate customers like me to the nearest cash point. Banks have realised the opportunity to adopt mobile technology to provide financial services to attract business and service current clients. Most banks now provide mobile access for customer account balance enquiries. The move to transactional services is the area that banks are being tentative on launching, although typically transactional services now being offered on mobile devices include bill payment and inter-account transfer. It is evident that most major banks are planning to accelerate their activity in mobile services in 2012, and in fact Fiserv is quoting from its 2011 research that the majority of the US banks studied are going to invest more than 10% of their digital investment in mobile payments. Convenience
But what of using my mobile as my wallet, without recourse to key pads, or computerised interfaces? Previously PayPal introduced the Bump function to enable me to pass money from my PayPal account to another by bumping the phones together utilising Bluetooth capability. This was a forward thinking move, incorporating great customer convenience and simplicity, but sadly a feature seldom used by me or anyone else.Now we have NFC (near field communications) which introduces the NFC enabled device to connect and pass money by waving the device across the receiving device. The rub is that there are very few NFC enabled phones today and these are only currently available in the US, but manufacturers are planning releases of NFC devices this year. Visa has already announced a list of smartphones compatible with its payWave NFC mobile payment system including LG Optimus, Samsung Galaxy S II and Blackberry Bold. In terms of the technology, UK banks are leading the introduction of NFC with contactless cards. Both Barclaycard and Visa have commonly available contactless cards which let you pay by swiping your card in retail outlets which typically display the ripple symbol signifying that they accept contactless transactions. During this early adoption period, the transactional value has been restricted to £15 or below for Visa payWave and Barclaycard. As an added security measure, multiple purchases will force a pin request. Despite the obvious convenience for small transactions, a recent Mobile Wallet survey found over 33% of the population have a contactless card but only 12% realise it. In the name of research, I recently visited a McDonald’s where wave and contactless payment are being promoted. Brandishing my card at the reader quickly revealed the unreliability of the card swipe process: after multiple swipes it proved quicker to revert to the chip and pin payment method. The staff confirmed that although head office had originally promoted the technology, in general it is not used and that sometimes it works even when the customer does not mean to use it. Next stop was Timpson where I was actively encouraged to use the swipe method by the staff to save time and reduce queuing: here it worked well and efficiently. It’s fair to say that NFC and contactless are the way forward, but retailers and the public need to embrace the technology for it to become mainstream.If your organisation is looking to offer payment services to mobile phone users you have several developing options today which will mature quickly during 2012: you could consider moving early on NFC by offering NFC stickers linked to a single credit card on phones, which is an early adoption work-around and would enable you to offer mobile payments from any phone. Several companies are now offering the supply of stickers, for example Twinlinx and Google Wallet are actively supporting the integration of this approach. Back to the questions I asked at the start: is moving money around, paying for goods and using my phone as a wallet a trusted direction to move in today? From a customer’s perspective, yes, and from a provider’s point of view it is in the early adoption phase where you can see differentiation and potentially market lead. Personally, I look forward to my mobile phone being my wallet and I am expecting it to be a game changer by 2013.John is the head of mobile and regional director of the Scottish office at Precedent. For further information, please visit www.precedent.co.uk, email john.campbell @precedent.co.uk, or follow @precedentcomms.