Blog: Unlocking the Real Value of Mobile Payments

By Amir Wain, i2c Inc.

For all the hype surrounding mobile payments, you would think consumers are banging down doors for the chance to pay with their phones. This isn’t the case though, and after close to 10 years of serious talk about mobile payments and countless wallet and mobile payments schemes launched, only 3 percent of U.S. consumers have ever tried it, according to a 2013 Bain & Company study.

This pitiful show of consumer support highlights a major disconnect between what consumers want out of mobile payments and what today’s services provide. The payments industry and those looking to innovate in the mobile payments space have been focused primarily on changing the payment mechanism from plastic to mobile. Consumers, however, have seen no value in this change. Spotty acceptance, coupled with consumer perceptions that mobile payments aren’t any simpler or more secure than card payments, has kept them from adopting. For this dynamic to change, consumers will need to see more value.

This begs the question, “How can we unlock more value for consumers through mobile payments?”

The answer has less to do with payments and more to do with the needs surrounding payments.

Invisible Payments: A Catalyst for Innovation

Giving consumers what they really need and want from mobile payments will require making payments as invisible as possible. To make this happen, we need industry standards for mobile payments at a platform level. This approach involves separating the payment from the overall purchase experience by making payments a simple service that can be accessed according to open, defined standards. In this environment, payments fade into the background.

This scenario is ideal for jumpstarting consumer adoption for a couple reasons. First, it will meet the basic needs that consumers require for payments—widespread acceptance, simplicity, security, speed, a predictable experience and control. Second, it will help focus efforts on unlocking additional value for consumers by addressing their unmet needs before and after the actual payment (more on this point below).

Realizing the benefits of “invisible” payments will require a few pieces to fall into place. First, the major payment networks must establish a technology standard at the POS. Second, Apple and Google, which control the two leading mobile operating systems, must coordinate to establish coding standards for app developers. Third, investment in back-end infrastructure is required to create a truly compelling consumer experience. Finally, consumers must be educated about payments security so they become comfortable transacting via mobile.

Meeting Consumer Needs along the Purchase Journey

I mentioned above that de-emphasizing the payment mechanism will bring more attention to the opportunities surrounding payments. Payments do not happen in a vacuum without context. They are just a small part of a larger journey consumers take when making a purchase. By looking at all of the events, needs and motivations leading up to and following payments, we are able to get a much better sense of where there are unmet consumer needs. By addressing these needs, additional value will be unlocked, and it is this value that will persuade consumers to ditch plastic and go mobile for payments and commerce.

Think about the needs consumers have before they actually pull the trigger and make a payment. They might want to research products or compare prices, for example, but there is not often an efficient and easily accessible means for them to perform these tasks. Similar pain points exist after payments are initiated (think warranty registrations, receipt management, etc.). Each consumer pain point or unmet need along the purchase journey represents an opportunity for innovation. Because most of the industry has been focused on payments instead of addressing consumers’ needs along the purchase journey, there are many such opportunities waiting to be addressed.

While efforts to get consumers to adopt mobile payments have failed to date, the future of payments will most certainly be transformed by mobile. What we’ve witnessed in this space over the past few years was just an opening act for invisible payments. When they become a reality, innovation to the surrounding commerce experience will commence in earnest. That’s when the real fun will begin!

Amir Wain is CEO of i2c Inc., a Silicon Valley-based payments processor. For further analysis of consumers’ pre- and post-payment needs and learning more about what areas are ripe for innovation, check out i2c’s latest white paper, “The Next Evolution in Commerce: Invisible Payments.” Amir can be reached at [email protected].