The Obvious Insight to Mobile Payments

Mobile Payments Are ComingBen Thomp­son at Strat­e­ch­ery wrote a few inter­est­ing words on Mobile Pay­ments (that the NY Times sub­se­quently copied).

I believe peo­ple aren’t using Mobile Wal­lets because they suck. In a world where we’re com­plain­ing about an extra click (or touch) to do some­thing in an app, how can you look at cur­rent mobile wal­lets and have any doubt about why peo­ple (not users) haven’t adopted them?

The answer to cre­at­ing a mobile wal­let that suc­ceeds is a sim­ple 2 steps:

  1. Under­stand why Star­bucks cus­tomers use the Star­bucks App to pay when no one else uses “wallets”
  2. Cre­ate a gen­eral pur­pose answer to Starbuck’s point solution

Once you’ve fig­ured that out, drop me a line. Here at CA we are both lead­ers at fraud pre­ven­tion & iden­tity man­age­ment, and we’ve used some of our proven secu­rity patents to cre­ate an HCE-compatible pay­ment mech­a­nism for stor­ing pay­ment cre­den­tials on the phone to improve the cus­tomer expe­ri­ence at checkout.

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  1. Andy Meyer says

    Actu­ally, there are sev­eral rea­sons mobile pay­ments are dif­fi­cult in devel­oped coun­tries. The main ones being that there are already solu­tions (credit cards, cash, debit cards, etc.) that work well enough, have mas­sive net­work effects and are VERY resis­tant to change.

    The prob­lem change elec­tronic or mobile pay­ments, is that the incen­tives don’t lead to change. For con­sumers, there’s lit­tle incen­tive. For large retail­ers, there’s zero incen­tive, because they can develop their own “loy­alty” or credit card solu­tions, which are cost effec­tive and have good lock in features.

    How­ever, there are places where mobile pay­ments are boom­ing. In Keyna, M-Pesa has been devel­oped and refined to where it is not only a store of value (i.e. a sav­ings account) it’s also the pre­ferred method of pay­ment. This solu­tion is now cov­er­ing much of Africa and is so effec­tive, Voda­phone is bring­ing it to East­ern Europe.

    Will it come to the indus­tri­al­ized world, prob­a­bly not. The rea­sons it’s suc­cess­ful in the envi­ron­ments where it’s used, do not exist in the indus­tri­al­ized world. But it’s a great solu­tion, just not to the west­ern world.

    There are dif­fer­ent classes of prob­lems in this world. Just because there’s a prob­lem and a solu­tion can be built, that doesn’t mean it can sus­tain a busi­ness. At least not in all locations.

    How­ever, if a phone com­pany (Voda­phone or maybe Ver­i­zon etc.) had a large enough user base and enough incen­tive, they could dis­rupt elec­tronic pay­ments. How­ever, I’m not sure they have enough incentive.

    • says

      Totally agree with all your points, but a few obser­va­tions:
      1. I remem­ber how for years it was impos­si­ble to find some­one in the US to text-message with, when in Europe I couldn’t type fast enough.
      2. You’ve fallen into the trap of defin­ing the prob­lem the way we view the space today. The best exam­ple I can come up with… when Apple launched the iPhone, RIM real­ized that Apple didn’t make a bet­ter phone, they cre­ated a smaller com­puter that hap­pened to make phone calls. We don’t need a bet­ter wal­let; we need some­thing else (that I can’t quite artic­u­late myself). I know that right now I carry 5 things in my pock­ets — cash, receipts for credit card trans­ac­tions, my wal­let, keys, and my phone. Would love to carry only my phone (and am real­is­tic enough to real­ize that I may always have to carry cash).
      3. Just as the way indus­tries pro­tected by gov­ern­ment reg­u­la­tion get weaker, not stronger as a result of the arti­fi­cial (and anti-competitive) reg­u­la­tions, so also com­pa­nies that rest on their lau­rels and lock con­sumers in because they can (rather than by pro­vid­ing a supe­rior expe­ri­ence) will also get weaker, lead­ing to even­tual (if slower) disruption.


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