Sunday, March 01, 2015

Who wants mobile payments? Everyone but the customer

A question I have long had and wanted to explore is this: Why are mobile payments not taking off?

By mobile payments, I am referring to the use of smartphones to pay for items directly without the presence of a credit card or the explicit entry of credit card data.  It seems to me that the technology has been around for some time (in the form of NFC - or near field communications - chips), that big companies have made a push in the past (e.g. Google Wallet), and yet I hardly ever see people using phones to make payments. Of course, Apple Pay is relatively new and might drive a lot more mobile payments. But, for now, it does not look like mobile payments are taking off.

From several articles I have read (most recently, a NYTimes Bits report that Google is getting more aggressive, it sounds like there are many benefits of mobile payments for everyone but the customer. For example, retailers who use mobile payments can provide the customer with targeted promotions based on their geolocation to drive customers to try new products or to push them into a store they are close to. Internet companies like Google would benefit from having more data about purchasing decisions.

But, to me, it looks like the benefit to consumers is still not large enough  to make us switch. For example, the last time someone tried a mobile payment in front of me at Starbucks, it took a long time and everyone waiting in line got upset. I personally am not excited about turning in my credit card because dependence on a phone for payments and emergency calls seems to concentrate downside risk in times when I lose things. With all these downsides, I need to see more upside for me to switch.

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