A Lack of Trust is Hampering Mobile Payments
Mobile commerce is just beginning to take off, but certain elements like mobile payments are slow off the mark. How will your business capitalise?
On the 10th of January, Visa Inc. and Visa Europe announced that Near-Field Communication (NFC) enabled smartphones from Samsung, LG and RIM have been certified for Visa’s mobile application for payments at point-of-sale. Now mobile payments won’t even be restricted to making remote purchases. Customers will have the possibility to control their total shopping experience in-store or out.
Mobile technologies have long been regarded as the ‘next step’ for online retail and for shopping in general. While the transition from science fiction to fact has taken longer than anticipated, KPMG’s Consumers and Convergence study shows more consumers now have smartphones, and that they are quickly becoming au fait with how to bank and make purchases on them.
“Consumer’s are clearly open to using their mobile devices to conduct everyday transactions and will steadily move in this direction for years to come,” Mitch Siegel, a Principal in KPMG LLP’s Financial Services practice told Multi Service.
The research shows 33 percent of responding US consumers have used mobile banking (compared to nine percent in 2008). Interestingly, many also responded that they did not feel comfortable with the security and privacy capabilities of their devices. This concern for safety may account for the fact that mobile payments and banking are not yet dominant, as has been predicted previously.
Angela West notes in PCWorld that the spread of mobile payment systems has been hampered by motivation. In the example of mobile wallet networks, these systems simply aren’t yet able to offset the liability that is inherent in card-not-present transactions.
“We’re not at the point where we can pay for just anything with our smartphones yet,” West said. “It may be an entire generation before physical credit and debit cards become extinct.”
John Debrincat of eCorner says that mobile payments would be adopted more readily if users trusted their mobile service providers more.
“Most people distrust their mobile service providers,” Debrincat said. “So to have the phone act as a method for providing a financial transaction there has to be an improvement in the perception of the service provider.”
It is still believed by many that while m-commerce may still be in its infancy, it is on the verge of booming. Portio Research recently released Mobile Payments 2012-2016. In it, they reveal there were 158.1 million mobile payment users worldwide in 2011 and that number is tipped to reach 1 billion in 2016. Mobile payment volumes, which stood at USD $159.3 billion in 2011 are projected to cross the $1 trillion mark in 2016.
It’s clear that there will be a lot of money to be made on the mobile market in the future, whether it be from purchases made remotely or in store. However, this does not mean that businesses should simply look to ‘keep up’ with the changing technology. For companies looking to innovate and thereby differentiate in the m-commerce space, a little extra thought and effort now will go a long way. In that sense, it is a good thing that mobile payments are yet to become the norm. There is still time to carve a niche in this market, as long as businesses understand their customer’s motivations.
As a merchant, it is important to understand as much as you can about what your payment processing company can provide, and to ensure that it suits your business. Security is just as important, and if you demonstrate expertise with both of these elements, there’s no reason why your mobile sales won’t quickly grow ahead of the curve.