18 April 2014

Nick Ogden

Nick Ogden - Voice Commerce Group

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Mobile payments - is the public ready to trust yet?

13 April 2012  |  5033 views  |  4

On the surface of things, it is unsurprising that figures released this week suggest that mobile payments are the future.  KPMG predicts that global m-payment transactions will grow 97% per year, over the next three years, reaching a value of £591 billion by 2015. They are not the only ones who think this is true; business intelligence consultancy, Berg Insight, says there will be 894m worldwide users of mobile banking by 2015.

Yet, when Barclay’s Pingit, a mobile app which allows the peer-to-peer money transfer via a mobile phone, was released in February 2012, the reaction was mixed.  Naturally there was much fanfare about this innovative step; the videos showing a group of friends going out for a meal and splitting the bill with their mobiles made many wonder how we have ever survived without such a tool.  Yet the announcement also raised questions, specifically around how secure such payment methods are.

Barclays assured the public that Pingit payments are as secure as any regular banking transaction, yet public reaction remained varied.  At the time of the announcement, The Telegraph ran an online poll entitled, ‘Do you trust mobile phone banking?’ 49.05% stated that they trust this method, whilst 22.83% said no.  A significant 28.12% said they will trust mobile phone banking in the future, but they aren’t there yet.  These figures, and our experience from Internet banking, suggest that the public will come round to trusting such services, but financial institutions and telecoms companies still have to reassure and educate users. 

The forecasts released this week allow us to assume that consumers will be won over in the battle between convenience and security.  It’s not hard to see why; the next generation of consumers coming through expect to be able to make real-time, cashless payments.  It is also clear when we look to other markets – in Japan about 50% of all grocery payments are already made by mobile phones – that there is public demand for this service.  Furthermore, there is the argument that mobile payments are at least as secure as any other financial transfer. In which case, once the convenience factor is demonstrated, it won’t be long before consumers start to leave behind their security worries and embrace mobile payments. 

No, the public may not be ready to trust yet, but it’s only a matter of time.

 

TagsMobile & onlinePayments

Comments: (4)

Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune | 17 April, 2012, 11:26

Convenience and security are certainly critical success factors but, in predicting the future of any retail payment service, its business case for the service provider plays a vital role, especially when the service provider is a multibillion dollar behemoth and not an exit-happy startup. After seeing what happened with Nokia Money, I'd be lot more confident of Barclays PingIt's long term prospects on this count if (a) Its users were willing to pay for it, and (b) It supported person-to-merchant POS payments, which not only fetches interchange revenues for the bank but also has two orders of magnitudes greater volumes than person-to-person payments. Since it's available to Barclays and non-Barclays bank account holders alike, PingIt doesn't seem to be capable of delivering the standard upsell / cross-sell benefit.  

Antti Larvala - CAL360 Degrees - Brussels | 25 April, 2012, 08:03

To me mobile banking and payments has to have following things:

  1. I can with mobile device at my usual stores, like crocery stores I usally shop - I could leave my wallet home
  2. I can choose which method I pay with mobile payment (credit, debit, direct debit or e-invoice)
  3. I can select extra level of security with PIN
  4. Mobile payment is not limited to one device/ brand/ bank but works with several banks, brands and devices.

 

Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune | 25 April, 2012, 10:56

@Antti L:

I think your wish list is quite exhaustive. Apart from #4, I think any mWallet available in the market today (e.g. Google Wallet) supports almost all your other 'asks' when coupled with lockscreen password, which is anyway available on all smartphones.

Antti Larvala - CAL360 Degrees - Brussels | 25 April, 2012, 11:03

True that my list is long but I hate every new payment service where I have to either first change a device to get new m-payment service plus get credit card from one bank. Instead getting mpayment which already fits to my device and I can choose how money goes from account (fast from bank account or slower as bill or credit card payment).

Finally there is chicken and egg-situation as long as mobile payment is not accepted in a places where I shop frequently. If my local grocery store would accept m-payment, (they already use self scanners) I would be happy to leave my wallet home and use mobile device for these local payments.

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