Apr 25, 2006

Mobile commerce study: a case of analysts not hearing what people are saying

This looks like a case where analysts ask people questions, seem to hear what people are saying, then end up with a totally wrong conclusion.

Analyst firm In-Stat, as reported here, has released a study on how phone subscribers in the US might react to using their mobile phone as a mobile wallet that includes transaction capabilities, as well as other items one may find in a wallet, such as membership cards, loyalty cards, and other forms of identification.

The study found that the attitudes of US users towards mobile wallets are at best lukewarm. Roughly one-third of respondents are 'interested', one-third 'indifferent' and one-third 'uninterested'. The most frequently mentioned barrier to the mobile wallet is the fee for its use (72 per cent of respondents), followed by security concerns about losing the phone and privacy.

That seems clear and straightforward enough. Customers don’t understand the benefits of mobile wallets and are clearly not turned on. In spite of that, the analyst firm came to conclusions which appear totally unrelated to what people are saying. They conclude that “as many as 25 million wireless phone subscribers in North America could be using their mobile phones as mobile wallets by 2011.” That's a pretty bullish projection when customers are saying that they're not really interested!

“In-Stat believes that the market can grow only by adopting a technology that offers the most versatility by providing both transaction capability and content discovery,” says David Chamberlain, In-Stat analyst. “There are several technologies that could enable mobile wallet operations of handsets, including Near Field Communications (NFC), Radio Frequency (RFID), bar codes, and visual recognition. Standardization efforts around NFC may give that system the edge.”

The words are already scary enough. Try this: stop someone in the street and ask them if they would be interested in adopting versatile technology that provides both transaction capability and content discovery.

Yes, the technology exists. NFC has been around for a long time. So has contactless card technology. RFID and bar codes too. I don’t know why they threw in visual recognition, but hey, while we’re at it. Just because the technology exists doesn’t mean that the stuff solves real problems for people. And my pet peeve right now: not a word on why merchants would be interested in mobile commerce.

This industry really needs to stop wasting time and energy on technology purely for the sake of technology, and instead look at solving real problems for real people. It is especially vital for the payments industry to learn to focus on payment products that truly satisfy the merchant community and stop ignoring the existence of this tremendously important market segment. It can’t be that complicated.

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