Doug Stephens is one of the many distinguished speakers taking part in UNTETHER.talks, June 26-27th in Toronto, Canada. In ramp up to his #Utalks session, we asked him to guest post on the blog about recent developments in mobile payments. Check it out!
Earlier this month the Canadian Bankers Association released a series of guidelines aimed at paving the way for the building of a mobile payment system(s). Together with Canada’s major mobile carriers, the CBA mapped out broad issues around privacy, platforms and partnerships in building digital systems of payment for Canadian consumers, who by the CBA’s account, are “looking forward to being able to pay at point of sale with their mobile device.”
Similar projects in the U.S., such as ISIS and Google Wallet, have begun to look like a modern day space-race, with everyone from carriers, to banks, to retailers stepping on each other’s necks to get there first!
So, with all this noise and apparent urgency in the market around mobile payment, a little perspective might be in order.
First of all, it’s always a little worrisome when a nation’s banks and wireless carriers come together under the pretense of developing something that actually helps the consumer. After all, neither really have a great track record for selfless consideration of their customers. While the report asserted that there would be no new or incremental fees associated with mobile payment, most people in the retail and financial industries see new and increased fees as a certainty once consumer adoption is solidly in place.
Secondly, there simply is no groundswell of demand for mobile point of sale payment as our banks and wireless carriers would have us believe. In fact, the majority of consumers surveyed want little to do with it – at least not right now. This inertia is due largely to the simple fact that our credit and debit cards aren’t broken, and presently work just fine. They also don’t have batteries that need to be recharged before we can pay the bill for dinner.
Some have wrongly compared mobile payment and ATM adoption. ATMs were readily and rapidly adopted because banks were often closed on weekends and evenings. There was a clear consumer-driven need for the ATM. Mobile payment on the other hand is a platform being set afire by institutions that stand to gain from it, not consumers…not yet.
There’s also legitimate concern on the part of the public about confidentiality and privacy. If my bankcard is stolen my banking information could obviously become compromised. If my mobile device is hacked, however, someone could conceivably access my financial information, the name of my kid’s school, my wife’s office address, my entire contact list, and potentially my medical information – essentially my whole life. And as Time Magazine reported earlier this year, NFC transmissions of information are indeed hack-able.
Lastly, and maybe most importantly, there’s very little added value at the moment for consumers to move over to a mobile payment platform. It’s really just a transfer of functionality from one device (a chip-card) to another (my mobile device). Perhaps once my mobile wallet will track my expenses, advise me on how to save money, manage loyalty points and make recommendations based on my past purchases etc., the switch will make sense from a consumer’s point of view. At the moment, however, it’s really only the banks and wireless carriers that stand to gain on this entirely fresh playing field of potential revenue. The opportunity for paid services, new transaction fees, increased data usage, advertising sales and more are absolutely incalculable. Why on earth wouldn’t they be pushing mobile payment?
None of this is intended to refute the inevitability of the digital wallet. Whether using mobile devices, biometrics or some other format, the move away from physical payment and credit systems is almost a foregone conclusion. I think it’s critically important though that we, as consumers make the move, with eyes wide open. Right now there’s just not a lot in it for us, short of laying the groundwork for even more profit for our major banks and mobile carriers. So, rather than blindly accepting the solutions we’re handed by these groups, I hope that we regard mobile payment as an historic opportunity to potentially loosen the stranglehold these institutions have on our money, our information and our freedom of choice.