Nov 24, 2006

A failed mobile payments initiative: how the words you use can cause you to fail

Listening to the second part of Dave Birch’s interview with Tim Jones, something finally dawned on me. Tim repeatedly used a concept that I found a bit odd at first, and which became more and more disturbing as I listened.

In Dave’s latest podcast, Tim talks about the Mondex e-cash trials years ago, and how they were already thinking of using telephones to load money to cards. But he doesn’t describe it in those words. He uses a more peculiar vocabulary, describing telephones as “Mondex cash dispensers in the home”, talking about how Mondex “turns the telephone into a cash dispenser” and how “everybody’s mobile phone will be their cash dispenser.” Of course, no cash is actually dispensed, but his language suggests that Mondex depended on this analogy between physical cash and e-cash. Clearly, Mondex was designed to “replicate cash”, a term that has popped up repeatedly in this interview and in many other places. As it turned out, Mondex could never be a good “cash replicate” because cash is accepted everywhere. Ironically, Mondex did not have to be presented as a cash replicate, but that’s the analogy in its creators’ heads and they probably never could really escape from it. I am beginning to believe that the analogy actually killed the product. I'll explain why in a few minutes.

Tim goes on to describe the much more recent failure of Simpay, a mobile payment company created by Orange, Telefonica Moviles, T-Mobile and Vodafone and which was headed by Tim. He speaks of a mobile payment system which tries to “replicate the wallet.” There’s that same analogy again. Instead of replicating cash, Tim talks of replicating a wallet. Replacing a physical wallet with an electronic wallet. Very much like Mondex replacing physical cash with electronic cash.

Tim describes a major problem. He invites listeners to imagine an average consumer with four or five bank cards, all loaded to the customer’s NFC enabled mobile phone, along with their Hilton Honours card and BA Miles card. The POS recognizes all these cards and could process any one of them. Imagine you are a POS terminal. Imagine your confusion. Which card do you choose? Where do you start the selection process? “As soon as you try to replicate the wallet, you’ve got this application select issue. If you then say, well the customer has to preselect before they go to the POS, I just think that ergonomically that is a disaster. They won’t do it.”

Of course, the physical wallet doesn’t have this problem. You just choose a card and pull it out. Also, you can add any card to your wallet that you want, not just a few cards that have been specifically designed to fit uniquely in the particular brand of wallet that you own. You can add pieces of paper, notes, reminders, and receipts. More importantly, you can add ANY of these things, from any source. If they don’t perfectly fit, you can fold them, cut them, or do whatever you want to do to your stuff. Replicating a physical wallet is going to be extremely difficult to do. But why do we need to burden ourselves with the notion of replicating a physical wallet? Its lots of work and will always be a poor copy of the real thing.

Welcome has also fallen from time to time into the mental trap of trying to replicate things. For example, “replicating green shield stamps” by transforming them into electronic points. Or replicating paper coupons and making them disappear into a smart card in the form of electronic data. Simply replicating these things was not enough. We had to come up with completely new ways of doing points and coupons, not just converting them into electronic data.

The word “replicate” itself is dangerous because it does not indicate a substantial improvement over the original thing being copied. The thesaurus built into my version of Word gives these alternatives: duplicate, copy, imitation, reproduction, photocopy. Nothing indicates an improvement over the original thing, and in most cases, we are used to a copy actually being inferior to the original. Mondex as a “cash replicate” was indeed inferior to real, hard cash. Mondex as something else might have had a better chance of success. E-points and e-coupons as simple electronic replicates are most likely inferior to the original things, whereas e-points and e-coupons become much more valuable if they are delivered and targeted in completely new ways which are impossible or extremely costly with the original, physical versions of points and coupons.

Unfortunately, in our industry, the simple improvement of doing something electronically is often enough to get people to spend huge amounts of money, as we saw with Mondex, Visa Cash, Proton, Chipknip and more recently with Simpay. We get excited about replicating things, but consumers don’t. And they are right. Why should they get excited about a poor imitation of something that already works well, just because the imitation happens to be electronic?

See my prior post on part one of Tim's interview.


Citizen Dave said...

Very thought provoking post, very interesting.

But you say that... "As it turned out, Mondex could never be a good “cash replicate” because cash is accepted everywhere."

But apparently it isn't!!

See the post "Snap!" on the Digital Money Blog.

Aneace Haddad said...

:) You're right! Cash is not really accepted everywhere, as you point out. I am doubly at fault since I did my own post on Snap café a month ago!