Jan 5, 2007

Mobile payments on the evening news in France

This news report discusses the mobile payment trial in Strasbourg, where some customers can pay with their mobile phones and enter their PIN codes into the phone keyboard rather than the POS terminal keyboard.

Dave Birch refers to this trial in his vision of the future of retail payments: "the retail POS shrinks to a button on the shop counter, whereas all the "smarts" migrate into the mobile." Take a look at his post. It gives a compelling vision of where things could go without major changes in how the payments industry is structured. However, if the role of merchants continues to grow stronger, there could be a growing push to put more and more smarts into the POS, where it is much easier to create merchant-centric features. These two forces compete for two very different outcomes, one issuer-centric and the other merchant-centric. The true outcome will surely be something in between, but that could happen in a pendulum fashion.

To me, the Strasbourg trial feels like a huge amount of effort on another technological gadget that doesn't really produce substantial new benefits for cardholders or merchants. Very much like the Moneo e-purse trials that French banks spent a fortune on and that was never really adopted by anyone. Where is the sound marketing and branding rationale behind all these efforts? Please don't say that people want to run around with their mobile phones and leave their wallets behind. You won't get any serious marketing expert to believe that one.


James Gardner said...

I rather like the wave and pay model myself, and i have to say, the idea of using my phone keypad rather than the terminal pinpad is appealling. As Dave mentioned, there is a privacy aspect to it, but also, I like the idea of not having to riffle through an overloaded wallet to look for a card in the first place.

When you have a bulky wallet (too many cards!) it is all too easy to just shove it in the briefcase. Your phone, on the other hand, is generally in the pocket and readily to hand.

As a heavy user of Oyster on the London Tube, I'd be *delighted* if I could do the same thing with a NFC equipped phone.

I am an avid reader of your blog, by the way. Thanks for your efforts.

Aneace Haddad said...

Thanks for your comment.

One of the problems that I'm struggling with is exactly what you describe with having lots of cards in your wallet. People tend to pay for different things with their multiple cards. It's easy to choose which card you're going to use by manually pulling it out of a wallet, but it becomes much more of a hassle to try to figure out how to select the card on your mobile phone before paying. And here's the real catcher: I am struggling to see what new value this provides consumers to get them to through the extra effort.

Another very important issue is loyalty cards, especially in fast/low value environments like coffee shops. If people present their mobile phone to pay for their coffee, will they still need to pull out their paper Starbuck's card to get it punched?

I definitely agree that mobile payments will work great in some retail segments, particularly monopolistic type segments with little competition (so little need for loyalty cards), like public transportation, parking, things like that. Where you need to go fast, pay a small amount, and don't get rewarded for your effort. But that's not a huge mainstream retail segment.

Again, thanks for your comment. You gave me an opportunity to spout off a little more :)