Is 2012 the Year of Mobile Payments?
Director, Channel Solutions
Banking and Credit Services
Each of the past three years has been hailed as "The Year of Mobile Payments," but the promise has yet to be fulfilled. Will 2012 finally be that much-awaited year?
In a word, no. Significant global progress will continue in emerging markets, where consumers continue to embrace mobile payments, but in the larger mature markets it will be another year of building.
2012 will be another strong foundational year. More smart phones are being delivered to the market; new companies and alliances are being formed to provide the ultimate mobile payment solution; existing companies and alliances are building out their offerings and infrastructure; and consumers are continuing to contemplate and experiment with mobile payments as a lifestyle.
That's all good news, so why isn’t this the year? Fundamentally, the number of players vying to dominate the market have created significant confusion over questions such as, “Do I have to have Near-Field Communications (NFC) technology? What is Apple going to do? Will Google Wallet or ISIS prevail? What are Visa and MasterCard going to do?” All of this debate neglects to mention the one constituency that holds the key to the widespread adoption and inevitable explosion of mobile payments — the merchants.
According to a September 2011 article in PC Magazine, industry executives expect merchant adoption to lag behind widespread consumer adoption of mobile payments.
Although players like Visa are working on incentive programs to urge merchant acceptance, the industry still has not made a compelling business case or value proposition for merchants to adopt and support specific mobile payment solutions. Aligning with NFC, selecting a particular solution such as Google or staying agnostic are all expensive options for merchants. Until the merchants can see a distinct value proposition that assists them with reducing interchange costs, increasing revenue, or reallocating/reducing marketing dollars to improve the business, the merchants will not move and the growth of the mobile payment industry will be delayed.
What do you think is a good business case for attracting merchants to mobile payment solutions? What works and what doesn't? When do you think we'll see "The Year of Mobile Payments?" Post and share your thoughts and feedback below.