Some fascinating insights were revealed at the Sibos session “Placing your bets on mobile payments”.  The panel included Dan Schatt from PayPal, Kelly Bayer Rosmarin from Commonwealth Bank Australia and Kiyoyuki Tsujimura from DoCoMo Engineering.  Emmanuel Daniel from the Asian Banker prompted lively sparring between the panelists with some well-chosen questions, and a few real gems emerged from the debate.

Dan Schatt went out of his way to present PayPal as a friend of the banks, highlighting that in the low value international payments business, the banks currently only have 3% market share and that PayPal is “enabling banks to take back this market”.  In an entertaining coincidence the share price of Western Union (which has about 20% of the remittances market) fell 29% on the same day on the back of a slashed earning forecast, citing a soft market and increased competition. 

Moving back  to the topic of the debate, he went on to say that the lines between internet transactions and in-store transactions are blurring.  This is certainly true – I use the PayPal Pizza Express app regularly: once I’ve got the bill and the waitress disappears into thin air, I can pay using the app that is linked to the debit card sitting in my pocket.  Hence it is a “Cardholder Not Present But He Is Really” transaction. 

The advent of PayPal use at Point of Sale is another example of this blurring.  Interestingly he said that 80% of consumers using PayPal at POS are choosing to enter their mobile number and PIN to pay, rather than using the plastic card option (which is effectively just a token containing the account details).  However he was coy about the absolute number of users so it is probably relatively low, but nevertheless it is an interesting insight into emerging consumer behaviour.

Dan also explained that they have bought six companies, including RedLaser and Milo, to provide a comprehensive suite of capabilities, stating that to change consumer behaviour you need to be able to do things in “two clicks”.   This is absolutely spot on – if a service is noticeably harder to use than an existing option such as cash or cards, then large-scale consumer adoption won’t happen.

We also heard from Kelly Bayer Rosmarin of CBA, the largest Australian Bank, about their experience with the Kaching app (presumably in the UK this would be called ‘Kerching’).  She pointed out that over 50% of their customers who access the bank online do so from a mobile device, up from only 10% two years ago.  Hence the ground is fertile for their mobile banking and payments app, and this has been reflected in the enthusiastic take-up from consumers and also micro businesses such as plumbers and personal trainers.

The service offers person-to-person payments capability, and the most popular way of paying someone  is to their mobile phone number.  The next most popular is to ‘bump’ phones, with payments to a Facebook ID coming in as the third most popular option.  Paying to an email address is a “very distant” fourth place.  There is great potential here for behavioural research: if two users are in the same place, would they prefer to bump rather than use mobile numbers? Why do so few people want to use their email address? Based on the PayPal experience, would consumers prefer to use their mobile number at Point of Sale rather than bumping a device?

It’s clear that consumers need a range of easy-to-use options, and that although behaviour changes slowly, people will adopt new methods and we will see a form of ‘natural selection’ emerging as payment methods evolve.