Last week popular consumer tech blog Gizmodo featured a scathing attack on the very notion of mobile payments as something most people would find useful. With a profane headline and repeated calls to “get off my lawn” (an American phrase making fun of older middle-class people irritated with youngsters) the piece is at least partly tongue-in-cheek. But the author doesn’t seem to be really joking in arguing that, beyond a few niche use cases, mobile payments aren’t likely to catch on anytime soon with her or other consumers. Which is unsurprising, given that we seem to be going through a general backlash against mobile payments.
While the continuing rollout of new and enhanced products and services shows the industry doesn’t seem to be listening to the skeptics, it is also useful to remember some of the many reasons the naysayers may be eventually proven spectacularly wrong.
- The hassle of EMV. Especially in the US, the most common argument against the value of proximity mobile payments is that they aren’t really any faster or more convenient than swiping a credit card. Except that increasingly, cards aren’t swiped, but inserted and left to wait, often for a painfully long period of time, and consumers and merchants are starting to take notice.
- The cash penalty. The author of the Gizmodo piece several times says mobile payments have nothing on cash. But in the US and many other markets, retailers have become accustomed to “hiding” card transaction fees in their prices, while many cards pass a significant portion of such fees back to their users in the form of rewards points or cash back. Many consumers know that if you pay in cash, you are usually getting short-changed. In the future, most or all will.
- Mobile wallets help fight plastic sprawl. Not only can mobile wallets allow users to more easily pay with a card, especially compared to EMV cards. They also allow users to toggle between different cards and non-card payment instruments. Some technologies, like Cellum’s motionQR, even allow photo IDs and other official documents to be stored and presented securely in a mobile wallet.
- Reward programs are better in the mobile setting. In addition to helping consumers avoid hauling around loyalty cards in their physical wallets or on their keychains, mobile wallets also allow for better management of loyalty and reward schemes, including redemption of coupons and other one-time offerings.
- Peer-to-peer payments are catching fire. As real-time transactions are becoming the norm rather than the exception, consumers are embracing payment services like Venmo and even Facebook Messenger, in the process becoming accustomed to the habit of using their mobile devices for payments.
- Virtual banking is already killing it. Consumers are increasingly adamant that they be able to manage their finances on their mobile devices. While the current digital financial services landscape is highly fragmented, banks will eventually be pressured into providing all their services on mobile, which will further acculturate consumers into the world of mobile money.
- Big merchants are only just getting started. For smaller and medium-sized merchants, mobile payments will mostly just represent a new and convenient way of accepting payments. But many larger ones will find that branded mobile payment services are a key to creating an unforgettable customer experience, with Starbucks’ spectacular success offering just one example. And this process has only just begun.
- The US is just one datapoint on the mobile money map. Pieces like Gizmodo’s usually fail to take into account how the US differs from many countries around the world in terms of factors that impact the adoption of new payment technologies, and how countries without similarly established habits of using credit cards have a much steeper adoption curve vis-á-vis mobile payments.
- Security is king. According to a recent study, only 23% of consumers believe that mobile payment systems are capable of keeping their personal data secure. But this is demonstrably untrue – mobile payments are actually much safer than plastic cards – and the industry is now working hard to address the issue of trust. So what may be mobile payments’ biggest current liability could soon become its greatest asset.
- Plastic cards took decades to reach ubiquity. Today’s “startup ethos” has left too many with the notion that new technologies can only be a massive overnight success or a failure. But those who think mobile payments will never fully catch on because they haven’t already done so are probably not considering just how flat the curve for adoption of plastic cards was (see above chart). (Or, for that matter, the paper currencies which before that took centuries to catch on.) Either way, anyone who says mobile payments are already doomed because they aren’t yet 100% ubiquitous isn’t being 100% serious, and as far as we’re concerned, should go ahead get off our lawn.