Why mobile payments need a rethink

Everyone believes mobile commerce is the next big thing – so why hasn’t it taken off asks Andy Bateman in an opinion piece that first appeared in Encore.

Look around your office – see any smartphones on the desks? How about cash and credit cards? See much of that just laying about? Didn’t think so. While we go to extremes to protect our cash we are a little more cavalier when it comes to our smartphones. We’ll put them down wherever we are. We’ll even leave them on a table while we go to the bar to buy a round of drinks.

This doesn’t mean we’re not attached to our phones – after all they are the only organ that exists outside our bodies. And judging by the people on smartphones on my bus this morning, I’d say we’re about as attached to our smartphones as we are to our clothes. Most of us are lost without them, more or less in constant contact through them, and they’ve become the first place we go when we need, well, whatever.

So why aren’t more people paying for stuff with them?

I can scarcely pick up a paper (metaphorically speaking, but you get my drift) without reading about the massive growth potential of near-field communications, payment apps, square – the latest banking app that seamlessly transfers money, tap and go and so on. The infrastructure for mobile payments is also being built by players like Google, Paypal, MasterCard, Orange and others, and it looks like it could disintermediate whole chunks of the financial services system saving us money and offering the convenience of a digital wallet through our beloved smartphones. So in many ways it seems inevitable that we will all soon be paying with our phone. Beautiful, frictionless and cheap mobile payments. Bliss.

But the simple fact is, we’re not.

Today, in the most developed mobile payment markets like Japan, Korea and the US, mobile payments represent less that seven per cent of all payments. That’s less than cheques.

Why is that? Are we just in early adopter phase? Hardly. Mobile payments and near-field communication is nothing new and neither are apps, devices or any of the other players in the mobile payments area. Banks are into it too – and are busy creating apps to pay for a whole range of things. There’s the weight of entire industries and massive brands behind making us adopt mobile payments. So why such slow adoption rates?

As ever, it’s us bloody humans getting in the way of progress. We’re quite happy to buy stuff from our mobiles but we don’t really feel comfortable paying with them yet.

We are running a live poll right now and the results are 50/50. People are mixed on the whole thing. And we’re not surprised at all. Turns out we have all kinds of rituals and codes when it comes to money. We keep money private, close to us, hidden away. We need walled gardens that restrict our access to money. We want security, control and trust. All these codes are wrapped up in attitudes and sets of well-trodden behaviours – neural pathways in our brains that are hardwired. And right now, our behaviour around what we do with our smartphones just doesn’t match many of those pathways. They’re like parallel lines that might never converge if we don’t understand how. While on the retail side, all the work has been on enabling a set of behaviours that are just like using a card; bump to pay, tap to pay… using your phone as if it’s a card. So why not just use a card?

The whole thing needs a complete re-think.

We’re going to need to know a lot more about those money and transaction rituals and we’re going to need to build them into the capabilities of our smartphones to match the neural pathways we’re already familiar with – security codes, credit limits, automatic cut off, vibrations, tones and colours, you name it – the functions and codes that give us a sense of control over the payments we might make.

Then we’re going to need to completely overhaul the payment process. It’s no use just making it like a card or like cash – because cards and cash work just as well for that. We’re going to need to reinvent the experience; to create new ways to make paying better; more convenient, faster, easier, more secure, more reliable and more valuable and rewarding for us.

The players that figure this out first will win the newest and potentially the biggest battleground in mobile since smartphones got email.

Andy Bateman is the global CEO of The Leading Edge, a boutique agency working across research, strategy and data.


This feature first appeared in the tablet edition of Encore. To download click on the links below.



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