April 21, 2014
It's commonplace these days to question and to doubt Money and Commerce innovation? With billions of dollars of investments flown into this sector, are consumers really using New Payment Technologies? Year on year we are witnessing radically new solutions from suppliers/payment firms, who wish consumers would pay for things differently.
In 2013, we saw the following three retailers/merchants (illustrative) embracing mobile payment methods:
Walmart – Scan & Go app for iphone to scan barcodes of goods and pay at checkout terminal
Disney – NFC enabled MyMagic+ smartbands for payment across terminals at rides, hotel, etc.
Subway – Cloud based mobile wallet app for contactless payment via phone
Come 2014 and we saw some big food chains adopting mobile payment methods amongst others:
Wendy’s – Mobile wallet app to generate six digit codes for payment purpose
Taco Bell – Nationwide mobile ordering platform to be launched
McDonalds – First mPOS solution in Thailand for McDelivery 1711 service using Swiff technology
Burger King - iPhone application to allow customers to pay for Whoppers and order & in-store pickup as well
The above merchants are letting millennials or the ‘Gen Yers’ do what they do best - use their mobile phone. Millennials and Digital Natives are habitual users of mobile apps for everything. If they start doing a lot of mobile payments at the above places they would expect other merchants to do so as well. Especially when it comes to buying something, they would start questioning about non availability of alternate payment methods. This could escalate to a level where Millennials would start asking what is the need to carry cash to pay at a corner store, newspaper stand, falafel vendor or the hotdog vendor.
This kind of change in consumer behavior will drive everything. As more merchants will start accepting mobile payments, the consumer behavior will change further. The good news is that this cycle has already started now. That is why I say that the time has come for massive uptake.
I really believe the time has come. Since Consumer is at the center of any business, let me start from there. In a recent study by Qualcomm, 29% of the Americans said that the phone is the first and last thing they look at every day. In another research, at least 50% of the consumers will use 2 or more devices in their purchase process according to IBM. A research by Mapdom said more than half of those who purchased as a result of marketing message on their smartphone, did so on the device itself. To me these three (and others discussed time and again) are some of the most important reasons why, after a lot of ups and downs and doubts about digital/mobile payments, are resulting in change. So Lets Talk Payments and understand why I believe now the time has come and how the evolution is happening.
Its the focus on the consumer that is bringing about the change – it's not a dramatic turn of events, but iterations including lots of failures, and companies painfully changing focus. For the first time in 2000 years or more the coin and cash might have to co-exist with its powerful cousin – The digital and mobile currency. For last 10 years digital payments have been really trying to make in-roads. With the advent of 12 key enabling technologies it seems to be finally attracting the consumer. Some connected consumers are now coming to automatically expect businesses to offer alternatives to the traditional cash register, from contactless mobile payments, to card readers, to mobile apps and iPad mounted payment systems. And that’s driving change in both offline (proximity) and online (remote+) payments.
The past has seen clashes between the incumbents and the innovators. For example, Google wallet faced blockage issues from mobile operators and very recently the same thing happened with Paypal/Samsung Galaxy S5 app which was not available on Verizon version of the phone.
The lack of cross industry collaboration has marked slow adoption of modern payments. There have been differences between carriers and financial institutions and a walled garden approach by both of them. No matter what they do, if the consumer behavior changes for good, it will bring such a sea change in adoption by retailers that solution providers old or new won't benefit from staying out of the game.
Consumer behavior (especially Millennials) will indeed be a catalyst for the cashless world. Consumer has the potential to bring about an end to the Status Quo.