Posts Tagged ‘Mobile Commerce’

Mobile Payments: Marching On

May 23, 2012 in Uncategorized | Comments (0)

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Leading up to the CTIA Wireless Event in New Orleans earlier this month, there was some anticipation around a potential update on the timing for widespread availability of a NFC mobile payment deployment from Isis, the mobile payments joint venture between Verizon, AT&T and T-Mobile. Not surprisingly, it looks like we will have to wait a little bit longer to hear news about when we may actually start to see real progress in the availability of NFC. But as we march ahead on the mobile payments battlefield, we need to look beyond NFC and ask ourselves who are the key industry players in the mobile commerce war? And are they doing enough to educate consumers about the service’s security features and their benefits? The answer: probably not.

There’s been a lot of chatter in the media about whether NFC could be the missing link the mobile payments industry needs to achieve widespread adoption, but we’re not addressing the fact that mobile payments do exist without NFC, and are widely adopted all over the world. Americans tend to have a limited view of the world, so let’s take a look at our own market. Here, in the U.S., the mobile payments ecosystem is disjointed. In fact, it’s a bit of a mess.
This year we polled attendees at both Mobile World Congress in February and last week at CTIA to try and uncover what industry experts believe is holding mobile payments back. And in both cases, the overwhelming majority (76% and 71% respectively) of respondents cited that perceived security threats and lack of coordination among key industry stakeholders are the main obstacles to widespread adoption of mobile payments.

Security isn’t a threat to mobile payments adoption; it’s the perception that mobile payments are less secure than traditional payments. To date, the industry has failed to establish clear standards and ensure that everyone plays by the same rules.

Which players in the mobile payments industry are likely to succeed in facilitating widespread adoption of mobile payments? Almost half of our respondents at CTIA (47%) believe that financial service providers such as the banks and credit card companies are most likely to succeed in driving adoption rates.
There’s a clear disconnect between the service that mobile payment players are trying to deliver, and what consumers understand to be the value or benefit. Part of the problem with mobile payments in the U.S. today is that the credit card system works. There’s no flaw with plastic payments as they are, but in order to entice consumers to engage in a new way of doing things, there must be an added benefit.

This year’s CTIA survey results reveal that there’s still an unwillingness amongst consumers to pursue mobile payment options, and right now they’re not very optimistic the industry will be able to come together in the next year or so to deliver enough incentive to make mobile payments attractive enough.
NFC could very well become a universal standard, but it’s far from a sure thing. 84% of those polled at CTIA believe it’s still at least two to five years away. With all of the different providers looking to compete in the mobile payments space, they will need to find a way to come together, interoperate and make life easier for the consumer.

Plastic payments won’t be eliminated, but the industry will need to facilitate an extension of payments beyond the credit card, giving consumers more options. And consumers won’t consider the mobile option until the industry works together to develop standards and they understand the benefits. Until then, we’ll keep marching on.

NFC: Just Another Protocol

May 3, 2011 in Uncategorized | Comments (1)

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We’ve all been waiting a long time for near-field communication (NFC) capability on mobile devices. That’s the technology that enables mobile devices in close physical proximity to exchange data. It allows people to simply tap their phones on a sales terminal to pay for goods and services.

It sounds great, right? Many analysts have been saying NFC is the technology most likely to drive the growth of mobile commerce. But I don’t think it’s quite the Holy Grail it’s been built up to be. Don’t get me wrong; I’m glad to see new mobile payment methods in the marketplace. I think time will prove NFC to be just another protocol, just one way of many for consumers to use mobile commerce.

There are NFC pilots in the planning and rollout phases all over the world right now. Japanese and South Korean consumers are already making retail purchases with operator solutions built on Sony’s FeliCa platform. There are several pilots currently running in Singapore, and another in France. Operators in Germany, the Netherlands, the U.S. and the UK have all announced plans to roll out NFC-based payment systems between now and 2012. I’m sure we’ll hear about even more initiatives in the coming months. Without a doubt, over the next two years, we’ll see many of the pilots move on to commercial deployments.

Even with all the pilots, and phone manufacturers announcing they’ll put NFC chip sets in their devices (or we will see the NFC chips pushed via the SIM or a separate memory cards/stickers), the technology still faces a number of challenges to widespread adoption. Not every handset is going to be able to support NFC for many years and other alternatives face similar adoption issues in scale. Making the payment systems work requires the full ecosystem to come together, which means banks, mobile operators and merchants all cooperating and agreeing on terms, including who gets what and ownership of the customer!

And, as we’ve seen with the explosion of advances in mobile devices in the last few years, technology does not stand still. Something better could appear next year and render NFC all but obsolete.

All this adds up to a barrier big enough to block widespread adoption. We’ll continue to see it in closed-loop deployments for many years, but it won’t become the global standard, the only mobile commerce entry point. Consumers are already using other ‘remote’ mobile payments solutions via smartphone apps, SMS, WAP, and USSD protocols, for functionality such as peer-to-peer money transfer, remittance, bill payments, top up, and purchase of goods and services, and I think that trend will continue.

NFC is good, and it can easily compliment these existing protocols, but it’s just not the Holy Grail.

Mobilizing the Unbanked at Home

October 14, 2010 in Uncategorized | Comments (0)

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Partnering with Sybase, MobiKash Afrika launched a pilot of the first intra-region, mobile network- agnostic and bank-agnostic mobile commerce solution for sub-Saharan Africa in September. The pilot is in Kenya, which is already a much-quoted reference country for banking the unbanked, due to Safaricom’s successful M-Pesa solution, and 63 percent of households owning a mobile phone according to the 2009 census. (Compare that to the 3.6 percent with computers.)

It’s exciting news for a few reasons. First, mBanking is real, live and available today, and the Sybase 365 mobile commerce platform is on the leading edge. Second, due to MobiKash being operated by an independent third party, it’ll be available to all users irrespective of their Mobile Network Operator, leading to a greater network effect.

Third, and most important, MobiKash will provide a range of banking services to people who have never had access before. Less than 10 percent of Africans currently participate in formal banking for a variety of reasons. On the one side, banks have been unable to maintain the profitability of services to this population via standard channels. On the other, the target customers distrust traditional banks and lack efficient transportation to branches that are few and far between. Using the new service, Africans will be able to conduct commerce from their mobile phones, be it purchasing goods and services, securing loans, and (of course) traditional banking.

MobiKash plans to expand to other African countries in the near future, where mobile adoption rates are growing rapidly, and provide intra-country services where possible.

This mBanking revolution (if you’ll allow me the term) to bank the unbanked is happening all over the world. Internationally, the media has written quite a bit about it, but there hasn’t been as much coverage in the U.S. We seem generally less interested over here, and I don’t know why. Maybe we think we don’t have an unbanked population here, but we do.

A January 2009 FDIC survey reported that approximately 7.7 percent (9 million) U.S. households are unbanked, meaning they don’t have a checking or savings account. Another 18 percent on top of that (20 million) U.S. households are underbanked, meaning they rely on alternative financial services such as check cashers, loan sharks and pawnbrokers.

So why, when the vast majority of Americans own mobile phones — something like 90 percent — and mCommerce technology doesn’t require high-end devices, aren’t we doing more about it? The MobiKash service enables customers to access and conduct business with any financial institution via any mobile phone service provider, and includes integration into networks of ATMs, POS terminals, EPOS systems, the Internet and local agents. It would be great to see lessons learned in Asia and Africa being applied into the U.S. market. Aren’t the issues—banks unable to provide services at a profit, customers distrust and lack of transportation—the same? At present, we see a lot of activity in Latin America, but not yet in the U.S. We expect it to change as early as next year, with mobile carriers that serve the unbanked through their prepay offerings leading the way, and some banks putting some trials into the market, looking to see if mobility gives them the lower-cost channel they need to serve the unbanked market.

A service like MobiKash, which allows customers to pay bills, send money, manage their accounts and transfer funds could do a lot to create a gateway into the mainstream financial system. It could help the unbanked right here at home build savings, improve their credit score, secure lower rates for loans and fees for transactions, and reduce a source of personal stress.

This is not only a huge business opportunity, but also a huge do-the-right-thing opportunity. Who’s with me?

Read more on MobiKash Afrika:

Do Consumers need NFC?

August 27, 2010 in Uncategorized | Comments (0)

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With all the recent announcements surrounding NFC in the last few weeks, including news of the cross carrier JV, Apple recruiting experts in this area etc., it has given me pause to wonder if we’re finally going to see some real adoption of NFC in the US over the next 2 years.

To answer this question we must start with the consumer benefit, as that will drive adoption (or not). Does the consumer need NFC? This is like asking do consumers need LTE or WIMAX – consumers need faster mobile broadband, they don’t care how technology delivers it. Near Field Communication is a radio frequency standard, not a consumer-facing payment type. What consumers really need is more convenient ways of making payments – although I think solving remote payment is more pressing than solving proximity payment issues. How many times have you not had quarters for a parking meter or failed to get crumpled bills into vending machines? Sybase 365 mobile payment implementations in Europe and Asia focus on a server-side mobile wallet, which can be triggered by a variety of mobile channels, SMS, Browser or Apps. We have not been waiting for NFC handsets and terminals to start offering consumers the benefit of paying by mobile. In the parking example, there is the added benefit that you can receive reminders and auto extend when time is running out on the meter. We are now starting to add NFC as an additional trigger method for remote and proximity payments, but in most cases the payment instrument remains server side in the cloud as it is for other mobile channels

In the US, where credit and debit and the terminal infrastructure is so established, do we really need a different way of doing proximity payments? Where mass transit is prevalent there is a case for NFC combined with payment card instruments stored locally on the handset (be it through sticker, SD or in handset). For speed through turnstiles, transactions and utilization can be driven by pricing (as London Transport does with Oyster on the Contactless card side). Outside of areas of mass transit, I struggle to see the user benefit or where we will see significant uptake. The convenience factor of tapping a phone vs. swiping a card (outside of mass transit) is not significant enough to change user behavior, so I remain somewhat dubious about widespread adoption. In fact the main clear benefit of driving payments from handsets is actually for the retailer rather than the consumer. A handset is a 2-way communication device that can receive offers and promotions in a way that a physical wallet cannot. However there are ways that we can entice consumers into opening up that 2 way channel with the retailer or brand that are not dependent upon NFC – based on our existing mCRM products.

At the end of the day, if our industry can find ways of improving remote and proximity payments via Mobile, we will see adoption, but we should see NFC as part of the enabling technology mix and not as the solution to push at consumers.