Smartphones have paved the way for mobile wallets to take off, but as Robert Haslam explains standardisation of mobile payment systems across the industry has yet to catch up.
If one device deserves an award for changing user behaviour over the past 15 years, it’s the mobile phone. Since smartphones have become a mass market product they have changed the way we shop, interact, communicate, find information and monitor our health. One area that is the subject of intense focus is how mobile will transform our wallet and the way we shop.
As mobiles have become more advanced, so too have the opportunities for the financial services sector to provide new ways to help customers with purchasing decisions. Part of the reason why the mobile can be a powerful tool for the financial services industry is that, on average we check our mobiles 150 times per day, according to a report by investment firm KPCB. In many cases, it has become the number one tool we reach for when we need information.
In order to get consumer acceptance, a mobile wallet should be about solving a problem or need. As well as providing an easy and secure way to pay, it could improve the shopping experience and provide value added services such as personalised offers or discounts. We are already seeing a number of these services come to market.
Mobile payments in the UK
Earlier this year Everything Everywhere launched Cash on Tap allowing customers with NFC chips to make payments in association with MasterCard. It can be used in over 230,000 locations across the UK and, just like contactless cards, allows for payments of under twenty pounds. Visa is also due to launch its mobile contactless proposition in December, whilst other operators will also be revealing their offerings in due course. Whilst there is movement in this area, there are issues around regulation and who controls the wallet – is it the operator, or Apple, Google, Microsoft, the payment provider or the bank? In the US, Google Wallet payments have been blocked by some of the operators who are pushing their own solution.
Lack of common platform
It also isn’t clear as to which technology will lead this space. NFC has been backed by Visa and other payment providers but there appear to be more questions about security and user experience than answers. Bluetooth Low Energy beacons is another technology many are now looking at as an option. PayPal is one company already experimenting with this technology and it is widely rumoured that Apple is going to be utilising it for payments.
Reassuring consumers
Balancing security with the user experience is one of the key areas to get right with the mobile wallet. If the experience of paying for an item is slower, or more complicated, there is no valid reason for a customer to proceed. Conversely, make it too easy and it will be hard to convince the user that their financial and personal information is secure. These challenges can be overcome by utilising some of the device features to offer two-factor verification or password protection.
Driving the market
The key to adoption of the mobile wallet isn’t so much about security, but about who wants it. What is the driver behind it? Is it to provide a better service, collect more customer information, help the high street differentiate itself or just offer another way for customers to pay? When it comes to changing user behaviour, the key is to provide something which helps to make the process easier, and more convenient. If it is more complicated to use mobile payments than to pay using a card; why would customers change? If the process is the same, all it does is provide another option. If it delivers more value in terms of helping customers manage their money better, or get access to better deals then change will happen.
