Mobile payment systems have been heralded as the future of retail for their convenience, security and the potential role they’ll play in mobile marketing. To some brands, however, the idea of mobile payments seems confusing, intimidating or dangerous. Further complicating this is a hesitancy to adapt and require the average customer to pay via mobile. Here’s a look at these and other reasons more companies haven’t adopted mobile payments.
Too Many Limited Options
To say “too many” and “limited” in the same sentence may seem like an oxymoron.The reality is that there are an abundance of options, but nearly all of them have at least one major flaw. Initially, businesses and early-adopting consumers alike can be overwhelmed by the amount of options and the technicality of mobile wallets, mobile card readers or mobile credit card processing. But once the research is done, many business owners and decision makers find that no clear leader emerges.
Lack of Consumer Interest
Despite the curiosity of technologically savvy early adopters, consumers are yet to demand or even be aware of mobile payment options. Last year, a CMB Consumer Pulse survey pointed out that only half of smartphone users had heard of mobile payments.Of that half, only 8 percent are familiar with the technology. Without a demand from consumers, how many businesses are even aware of the option? For most businesses, being an innovator and using cutting edge technology is a priority. However, innovating in the right area is driven by the desire to cash in on consumer interest. At this point there is very little consumer interest in mobile payments.
Balancing the Pros and Cons
Convincing consumers that a mobile wallet is more convenient than a physical wallet, full of cash and credit cards, could prove a tough task. Crafting a value proposition based on convenience seems futile, considering that credit cards are already a quick and easy way to pay on the go. Furthermore, credit cards are accepted almost everywhere. Mobile payments are a new technology, available in a limited number of places, with certain technological limitations that may cause confusion. For example, only the Android and Windows smartphones support near field communication (commonly referred to as NFC), a feature that enables tap-to-pay services offered by Google, Visa and MasterCard. Apple devices, on the other hand, do not support NFC.
On top of a marginal increase in convenience and potential technical limitations, mobile payment apps can be a burden on consumers’ smartphones. Smartphone and tablet battery technology is adequate for making calls, sending texts, checking social media and playing games, but all of these activities simultaneously can drain a battery by noon. Using a smartphone as a wallet adds to this battery drain, and users may not be able to recharge. In this case, a dead phone means an empty wallet.
Security Questions
The Payment Card Industry Data Security Standard (PCI DSS) is a set of controls around credit card exposure, protecting credit card data and transactions. Businesses are required to comply with these standards or else face fines. However, current PCI DSS requirements do not specifically address mobile card transactions. Perceivably, this exposes anyone who utilizes mobile payments to digital theft, malware, hacking and unauthorized use. In reality, most mobile payment methods are just as secure as credit card transactions, and many are protected by the same provisions that make traditional POS systems PCI compliant. What’s more, the PCI Security Standards Council has published security guidelines for payments accepted on mobile platforms, with a goal to maintain credit card security and reduce credit card fraud. Despite this, doubts still linger.
Many believe that mobile payments, even though they haven’t caught on, represent the future of retail. In spite of the competitors within the industry, security questions and general lack of awareness, mobile payments still offer plenty of benefits — for example, lower fees for processing and allow cost to integrate. Businesses looking to innovate should still consider accepting mobile payments. After all, the future belongs to whoever gets there first.
Kristen Gramigna is Chief Marketing Officer for BluePay, provider of mobile credit card processors. She brings more than 15 years of experience in the bankcard industry in direct sales, sales management, and marketing to the company and also serves on its Board of Directors.
You’re spot on with the “too many options” point. Should entrepreneurs choose PayPal or Google Wallet? Should they opt for ISIS, Square, Dwolla or LevelUp? The choices can be overwhelming.
From what we’ve gathered though, it looks like PayPal is currently in the lead when it comes to market share.
In any case, I do think mobile payments will be a staple in stores in the coming years. It’s only a matter of time. Like we said in one of our previous posts, cash and credit cards won’t be things of the past any time soon, but mobile will definitely get a huge chunk of the payments pie in the near future.