The Smartphone: The Conglomerate of Life
I found it rather interesting, that professor Ting Li mentioned mobile payments during the lecture on Monday, as an example of a conglomeration attack. Smartphones would become even more important. It is already almost the ‘end of the world’ to the average smartphone user when they lose their phone, imagine how much worse it would be if all payments were also mobile… The devastation one would feel when their battery is dead…
Personally, I have never been too interested in the concept of mobile payments, and it has been around for quite some time already. Google Wallet launched in 2011. The reason it stood out to me during class is because of something that happened this summer. My mum and I were driving, and we needed to get gas. She went in to pay, and as she wanted to pull out her credit card, the clerk told her the payment was already done. My mum looked at him not understanding, she did not even take her credit card out of her bag! That is the moment we realised the credit card company had implemented a new system. The scary thing about that system, however, is that if someone were to buy something right after my mum, the machine could accidently charge her instead of the next customer…
2015 has been called the ‘year of mobile payments’. This is reflected by many company’s initiatives. Starbucks already has mobile payments implemented in thousands of its stores in the USA. Similarly, numerous fast food chains have done the same. Subway and Paypal are currently working together to integrate Paypal’s OneTouch mobile checkout experience in the updated version of the Subway app, this would work across the 27,000 locations in the USA before the end of the year (Perez 2015).
With credit cards, the implementation is quite easy, as one card works in all locations that offer the service. The cards are the same for all users. However, in the mobile payment industry… How can one mobile-based financial solution cater to all markets?
Mobile payment systems are actually most successful in developing countries. There the choice was simply between either cash or mobile payments, which made the benefits of mobile payments, stand out. In Zambabwe, for example, a large mobile payment player called EcoCash made its debut in the mobile money space. It also offers many opportunities for businesses in developing countries to reach business beyond Africa’s borders. Earlier this year, three of the key players in Africa signed an agreement to work together, so that users from the three different services can easily transfer money to users from one of the other two services, creating a large mobile-payment community (Nidugondi 2015).
In developed markets, customers already have a wide variety of choices when it comes to payment methods, so why would they use mobile devices for financial transactions? However, considering the increasingly big role mobiles are starting to play in the purchasing experience, there may be a future for mobile payments. The Subway example is a perfect illustration of how mobile payments could enhance customer experience, customers would be able to assemble their sandwich and pay all through the mobile application. They would no longer have to stand in line, and could simply come pick up their sandwich once it is done. Furthermore, opportunities lie in customised offerings and location-based offers.
The statistics are quite impressive, actually. In Japan, NFC wallets are used on close to 65 million handsets by 15 million users initiating 30-50 million transactions per month with 750,000 merchants. Globally, mobile payments are expected to generate between $450 and $1 trillion in transaction value by 2015.
Although numerous projects have been launched in more than 35 countries across the globe, mobile payments still have a long way to go in terms of market penetration. Google Wallet is a perfect example (Nidugondi 2015).
I am very interested to see whether smartphones will be able to overtake the payment industry.
Nidugondi, S 2015, ‘The Year That Was And Will Be In Mobile Payments’, TechCrunch, 6 June, viewed 15 October 2015, http://techcrunch.com/2015/06/06/the-year-that-was-and-will-be-in-mobile-payments/
Perez, S 2015, ‘Subway Teams Up With PayPal On Mobile Payments’, TechCrunch, 29 July, viewed 15 October 2015, <http://techcrunch.com/2015/07/29/subway-and-paypal-team-up-on-mobile-payments/#.gs8fgo:Tp23>