The CTIA Wireless IT and Entertainment conference was held in San Francisco this week. Theme was “Wireless – It’s how you use it.” When it comes to mobile payments and mCommerce, I could not agree more.
I attended one of the mobile web 2.0 track sessions Day 2 on Mobile Payments. This educational track was intended to focus on the second generation of mobile Internet services including mobile financial services and extending the mobile web.
The assertion for the panel was that mobile payments – “From Retail Card-Based Payments to Transactions via mobile devices” can benefit from the interactivity of the next generation of the mobile web. This session was dedicated to taking the retail experience mobile and included representatives from MasterCard Worldwide, Amazon.com, First Data, Motorola and AT&T.
I had hoped to hear more talk of new technologies that will change the interface and draw consumers to the mobile web. The speakers were focused instead on the realities of “challenges” in the business model and defining use cases that will bring consumers to transact by phone.
Who makes the money and how was a significant topic of conversation. Consumers may expect payment to be free, but for mobile transactions to be encouraged, they need to grow the pie for all the players. While it was dealt with politely, the card association expressed concerned about the arrival of new players e.g. the carrier or manufacturer, into the transaction flow who would like to get paid for their network or phone provisioning. The carriers have educated consumers on monthly service fees with a menu of enabled services that may allow for some charges to the consumer in the monthly bill as opposed to per transaction.
Mobile payments have struggled to find the “killer application” or use case that will transform consumer behavior. In discussions of use cases, MasterCard was quick to point out the successes in transit and quick service restaurants. The use case for contactless payment is clear in these segments and this may lead to adoption in more areas like parking etc. Amazon highlighted their use of mobile alerts for scarce items like the Wii. Buying the artist’s album by phone at a music concert or voting for American Idol by text message is moving consumer behavior.
In store retail is still working out the kinks for mobile transactions. The time for point of sale upgrades is extensive and the technology is likely to move to contactless rather than single use numbers sent to mobile phones as suggested by a member of the audience. The need for cardholder verification on the mobile phone or login and password, even with floor limits, still makes larger transactions easier on a traditional credit card.
The point was made that to focus only on speed of transaction though was to miss the areas of convenience, security and the concept that people will leave home without their wallet but not without their phone. I think the latter point is a stretch to think that “mobile commerce will be driven by people without their wallets” – after all they still need their driver’s license to commute in their cars and office badge to get into many buildings. This is cash replacement and not a card or wallet replacement strategy.
There was resounding support for open mobile payment systems and technologies though it did not spill over into open technology on the phone. Everything needs to be more open but standards-based to accelerate acceptance.
Enabling advanced web browsing and enhancing the shopping interface with applications on the phone or on the web will be critical to changing the user experience. I felt the panel would have benefited with representation from the web browsers, the Iphone or the new Microsoft mobile solutions. These players or those who make applets to load to the phone may have added to the thinking about the potential for the mobile web to pass over the standoff between carriers, phone providers and card networks.
I’d hazard a guess that First Data had the most fun on the panel. While they spoke well on the issues, as the processor, they only asked that the others sort it out so there could be more transactions. Who from, who gets paid and how – they are indifferent.
In the end, there was general agreement that someone would make a big bet investment and turn the tide. In a final question, the crowd voted that mobile payments would reach 5% of total retail transactions in five years – “a self-selecting audience” was the moderator’s response.