May 3, 2007

What are retailers saying about mobile payment?

RetailWire often provides interesting insight into what retailers think about subjects that are dear to many of us in the payment industry. Two recent online discussion topics relate to mobile payment.

The first one (“What can we learn from Japan's mobile wallet challenges?”) essentially discusses an article in last month’s Card Technology Magazine which highlights hurdles to mobile payment adoption in Japan, a country seen as the earliest adopter of this technology.

Check it out if you would like a glimpse into how retailers think about all this new stuff. They are talking among themselves, so the comments are not as harsh and strident as they might be if they were talking to bankers about things like interchange fees.

While the comments are generally positive on the overall idea of paying with a mobile phone, they also raise major issues which need to be resolved before retailers will adopt the technology.

Here’s a very quick glance at some of the comments:

“Cell phone payment systems will be quickly adopted in the U.S. if retailers can save money compared to credit cards.”

“I believe the very public TJX data breech may hinder new types of payment processing.”

“In my Food/CPG Issues & Strategies class at Western Michigan University we always have one class where we discuss emerging in-store technology with our students. One of the topics we discuss is mobile technology and there is not a lot of interest on the part of these young people...most of this is fueled by security risks they are not willing to take at this time. Based on the students' feedback, I'm guessing it will be a long time before there are enough consumers willing to participate in this technology to create a return on the retailers' hardware investments.”

“As with any technology that goes into stores, the technology is going to have to mature, stabilize, and standardize before retailers will adopt--and without places to pay, consumers won't be too keen to sign up.”

“There is still little ‘convenience’ advantage associated with these phones. It would be great if you really could leave your wallet at home, but the bottom line is that our wallets are becoming more and more a necessity as clerks, airports and others require photo identification. And for women, until phones can apply make up, provide baby wipes and dispense Tylenol, I'll continue carrying a purse (with my phone in it).”

“Technical and security issues aside, we'll need to make the benefits compelling. Swiping a plastic card and keying in a PIN is already pretty convenient and secure. We all need to carry identification cards and therefore wallets, so I doubt this will lighten our pockets any time soon.”

“Once the U.S. overcomes its security issues with contactless payments and assures the public of the safety of using them, this technology will explode.”


John Januszczak said...

The first comment you mention ("...if retailers can save money compared to credit cards") says it all. In the end, it's always about the money. If mobile payments are the least costly for consumers and merchants then market forces alone will make the use of these types of payments favoured.

Here is an interesting thought I had: If the CEO of Google thinks mobile advertising can subsidize cell phones to the point of making their use virtually free then certainly highly targeted advertising within a mobile payments application can subsidize this payment channel to the point of making it very inexpensive for the consumer and the merchant.

Aneace Haddad said...

John, you just hit the nail on the head. That's exactly why Welcome adds retailer promotional marketing capabilities into the payment transaction. If retailers see the payment transaction and credit or debit card receipt as a targeted advertising channel, interchange fees become much more palatable. Basically, you could think of it as retailers paying for the targeted advertising capabilities and getting payment processing for free.