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Is the fintech industry killing mobile payments?

A while back I blogged my concerns about the future of mobile payments; “Why I am worried about the future of Mobile payments”.

In essence, the problem that I focused on is this - there are just too many forms of mobile payments being offered by too many organisations and by too many banks. This approach creates confusion. It come about because everyone is bent on promoting their own form of payment mechanism in the hope that it will be the next “big thing”.

There is nothing new in this approach. Ever since banks and technology began to come together beginning in the 1970’s, there has existed this weird notion that if a bank can create something unique they would be able to capture the market, beat the competition and make a fortune.

Of course this notion is totally false.  We have seen this proved on countless past occasions whenever new innovations have just failed to take off, simply because banks failed to note that the key to success is co-operation.

If they cooperate everybody wins. If they don’t cooperate we end up with multiple failures.

If there are too many payment mechanisms and too may payment apps all that will be achieved will be a multitude of duplicate systems. These systems will often be inadequate in their own right too as they fail to adequately address user needs. These users will be totally frustrated as too will be the retailers. Very rapidly these mechanisms will fall into disuse and be abandoned.

The key to success is a single simple uniform and universal mechanism available to all users, sellers, banks and technology vendors.

So now I fast forward from these sentiments which I blogged about in March 2015.

In recent weeks two articles have grabbed my attention. Both point to the sorry state of mobile payments today.

The one article is “Mobile banking adoption growth is slower than you think”. Here Stephen Greer makes it clear that there is a disconnection between the hype surrounding mobile banking  and the reality of how consumers actually interact with financial institutions. He points to the facts that a recent iteration of the Federal  Reserve’s “Consumer and Mobile Financial Services 2016” survey report shows that mobile banking adoption is really slow. Among the reasons for the slowdown is the fact that 86% of respondents say that they don’t use mobile banking because they can achieve their banking needs without it. Many consumers are perfectly fine solely using online banking or ATM’s or branches.

Their reasons for non-adoption are that many apps are not mature enough (39% said the screen was too small; 20% said apps were too difficult to use). And what applies to mobile banking applies to mobile payments as well.

The second article was even more damning. “This new app proves mobile payments are a mess” states that basically there was a time when to make a purchase was a simple process. You gave the cashier money or a credit card and you would get your purchases and maybe some change and maybe a receipt and off you would go. But today in many places that have embraced mobile payments, a multitude of the different services and apps has left the process at the checkout counter a confusing mess.

Different stores accept different payment mechanisms. This means that users have to have a multitude of different apps on their mobile phones as they don’t all work the same way. This leads to confusion and delays to the frustration of all concerned.

Different retail outlets have joined the fray as well.  In the U.S. Walmart refuses to accept Apple Pay because it wants to promote its own mobile wallet app.

So the intervening year and a half since I expressed my concerns have left me even more skeptical then I was then. No one, either banks or retailers seem to see how this misguided notion of beating the “competition” is not working. In the end the people who matter, the consumer, are going to turn their backs on this disorganized mess.

And that would really be a pity.  


Comments: (2)

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 16 August, 2016, 13:10Be the first to give this comment the thumbs up 0 likes

Too many products / services and we'll complain of confusion, as it's happening with mobile wallets. Too few products / services and we'll complain of monopoly / duopoly, as it's happening with credit card networks. While you're right in implying that everyone and his dog is introducing mobile payments, it's also a fact that many mobile payment services are also shutting down. So, in the long term - I don't know whether that's 5 years or 10 years or 50 years - maybe we'll be left with only 2-3 mobile payments. Alternatively, before we reach there, mobile payment technology may itself get disrupted by something else.

A Finextra member
A Finextra member 16 August, 2016, 13:14Be the first to give this comment the thumbs up 0 likes

Stanley, I understand some of your points, but I think you're missing some key parts of the overall retail experience. Today, it's about more than just a payment. It's about loyalty/rewards and offers/coupons. To your point about a single payment instrument, in reality the consumer now has several and also several loyalty cards as well as multiple coupons.

If someone, be it banks or platform providers, were able to provide an open and easily usable mobile wallet, I think your point would be valid. However, that's not the case nor will it be in the near or mid future.

To compensate for that, retailers and restaurants are pulling together their own mobile experience that is far richer and, in some cases, more secure than the lame wallets we currently have offered by Apple, Google, and Samsung.

Besides, most people can set up and navigate quickly to the appropriate wallet when in the shopping experience. What would make it even more viable would be if beacons were enabled at the register that would wake the app up when you were ready to check out and pay.

Stanley Epstein

Stanley Epstein


Citadel Advantage Group

Member since

09 Oct 2006



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