A Finextra member 03 October, 2013, 08:26 0 likes Great examples, Brett. Starbucks figures look impressive. However, if you disregard m-commerce transactions - which are about using alternative form factor for e-comm as opposed to using mobile phones to make payments in physical retail - the market is not that big at the moment. Yes, it's growing, and will continue to grow. When will it reach the tipping point? Well, depends on one's definition of "soon". Plastic cards are uber-ubiquitous, yet use of cash grows every year...

Brett King - Moven - New York 03 October, 2013, 08:42 0 likes

Alex,

The whole point of mobile is that it is mobile - you don't have to be in a store to make a purchase. A purchase of goods or services outside of a physical retail store doesn't make the purchase any less impressive in respect to modality. If my instinct is changing to pull out my phone and order a pizza, pair of shoes, books, book a cinema ticket, download a music or app, why should we eliminate that as a measurable shift in behavior? 

If I've bought a cinema ticket on my phone instead of going to the box office and tapping my phone, why would you suggest that it's not really moving the needle in respect to cinema box office purchases?

To your point, the transactions for Seamless, Uber and Fandango are not replacing eCommerce transactions - these are new behaviors replacing cash on delivery and phone payments, cash or card in taxis and cash or card at the box office respectively. In each case these are net new payments, not replacements of online payments. The fact that they are not made by tapping a mobile phone to a contactless POS terminal in a store is meaningless - mobile payments are emerging as a new behavior, unlimited by physical location constraints.

You should not measure the success of mobile based on payment artifacts of old.

BK

A Finextra member 03 October, 2013, 08:52 0 likes

Brett,

We shouldn't confuse m-commerce and m-payments. My definition is simple: m-payments mean payments in physical retail using a mobile phone instead of cards/cash/cheques.

Let's consider cinema tickets and Uber: if I book using a phone, you are saying it's a mobile payment. And If I pay via iPad? Tablet payment?.. And via PC? How would you term that?..

Another example is an interesting one: if I purchase KFC meal via an app and then simply give my order number in store, is that m-commerce? Or m-payment?

I think Uber and KFC are good examples of what "retailing" (and, hence, payments) could morph into: ordering and paying online, "consumping"/collecting in the physical world. That would blur the difference (again, in my definition) between payments, m-payments and m-commerce.

Brett King - Moven - New York 03 October, 2013, 14:22 0 likes

Alex,

I don't think that definition is broad enough. If an m-commerce transaction is done via a mobile, the underlying payment might be a card or a bank transfer, but the behavior is most definitely mobile in form. Uber, for example, doesn't allow you to make purchases via their browser, it has to be via a mobile device (whether phone or tablet) because geo-location is critical to its functionality and success. You couldn't call an Uber transaction on iPad e-commerce in that respect, and calling it only m-commerce, but not allowing that definition to include the mobile payment, belies the fact that every Uber payment must be initiated from a mobile device by its nature.

Wikipedia, incidentally, defines Mobile Payments as:

"Mobile payment, also referred to as mobile money, mobile money transfer, and mobile wallet generally refer to payment services operated under financial regulation and performed from or via a mobile device" 

In Kenya, this would include every phone to phone mobile money transfer via M-Pesa, for example. These are replacing cash, by and large. So mobile is displacing a traditional payment in another form. How could you not classify that as a mobile payment, simply because it doesn't happen in a retail store?

The definition of in-store purchases on a phone, where it replaces cash/card/cheque, would appear to be too narrow. While I understand the m-commerce label, the point of mobile is the fact you can purchase anywhere, and an in-store purchase is no longer a good enough definition for a device that can purchase at anytime, from anywhere. 

I think the definition should include P2P payments from one person to another, because they could reasonably replace a traditional cash exchange in person for goods/services.

I think the definition should include any e-commerce or m-commerce transaction that is done through an App on a mobile device (smartphone, featurephone, phablet and tablet), where that would replace a transaction that was previously done in-store, in person, or via a browser.

If the payment is initiated by a mobile device - the person is choosing to pay with their phone, versus an alternative modality either in-situ or remotely.

Your definition appears only to refer to a mobile payment made from a mobile wallet in a retail store - I think that is a 1.0 plastic/cash/cheque view of the payments world, not a 3.0 web/mobile/geo-loc/digital identity view of the world.

BK

A Finextra member 03 October, 2013, 22:00 0 likes

Brett, to be pedantic: the original meaning of word "pay" is to hand over money (or goods) in exchange of goods or services.

When cards were introduced, we stopped handing over cash. Hence, CARD payments.

When we use a mobile for "payment", if that - somehow - involves a card, that's still a CARD payment. Hence, buying something from iTunes or Amazon is not a mobile payment per se. In fact, there are no "mobile" payments - as you cannot use your PHONE to pay (you can only use it to give an instruction to carry out a payment; you can use it for authentication too).

If I have a contactless EMV sticker on the back of my phone, is that a mobile payment? Or a card payment? Let me help you there: what if I stuck that EMV tag onto my shoe?.. Shoe payment?

Let's come back to authentication for a second: payments are about authentication, the rest is pure "accounting" (I attributed that quote to you, BTW - could you confirm the origin, please). When we pay in cash, we "authenticate" banknotes. When we pay with card, we use it as part of the authentication process. Hence, unless a mobile phone itself is NOT used for or forms part of authentication, it's not a mobile payment. Examples of "true" mobile payments: Pingit, Google Wallet. Payments at Amazon and iTunes are doing using CARDS. Authentication there is done using password, NOT the phone.

But that's just me.

 

 

A Finextra member 08 October, 2013, 13:54 0 likes

A couple more stats I came across, in SWIFT's MIF (Market Infrastructures Forum) 2013:

In 2012 a record Yuan 151.14 billion (or approximately US$25 billion) in gross market value was processed via mobile in China - up 89.2 per cent over 2011. Alibaba, the owner of Alipay (the largest payment processor among over 250 licensed providers in China) recorded total sales of US$ 170 billion in 2012 (both mobile and online). That is greater than the combined sales of Amazon and eBay.

In India the InterBank Mobile Payment Service (IMPS) now processes 350,000 transactions a month, and is growing at 175 per cent a year.

Brett King - Moven - New York 08 October, 2013, 16:55 0 likes

@Neil,

I'm with you on this - any transaction that originates via mobile demonstrates mobile 'behavioral' shift and therefore should be counted, but what Alex appears to be saying it has to be a pure-play mobile transaction, in a store, replacing a card or cash transaction.

I think this definition is too narrow as it doesn't speak to the fact that a consumer's behavior has changed, and the data you've shared clearly speaks to that.

AliPay transactions are a great example. I would say it is likely that most of these transactions are nett new revenue for Alibaba and while closed loop (like Starbucks) would only be largely possible for customers who have mobile (but not access to a store or laptop). Thus, the measure of whether it replaces exisiting payment devices is hardly the point, the point is that mobile has enabled a completely new method of engagement and revenue.

Brett

A Finextra member 08 October, 2013, 17:21 0 likes

@Brett,

It all depends on your frame of reference. If your goal (not you, the generic 'your') is to 'prove' all those predictions around m-payments or m-wallets right (or wrong), fine. While you're doing that, the market (the usual arbiter of success) has moved on. The trouble is, our lexicon hasn't, and it needs to.

Clay Christensen, the author of ‘the Innovator’s Dilemma’ (the backframe for my Community Session at Sibos this year), thought the iPhone was sustaining technology relative to Nokia; only later did he realise it was disruptive to laptops.

Brett King - Moven - New York 08 October, 2013, 17:24 0 likes

@Neil,

I agree. The market has moved on and is finding it's own way, outside of definititions that don't make sense given exhibited behavior.