It’s kind of a strange irony that amid all the talk of NFC pilots and new apps that always comes in the week prior to Mobile World Congress (here), that they have actually been commercially available here in Belgium for well over 10 years – on every single SIM card and available to every cardholder within the national Bancontact/MisterCash debit scheme – some 15m cards (here).
Belgium is an unusual country when it comes to payments – it was the first to fully implement Chip and PIN technology at all POS, claims one the lowest level of unbanked in the world [the national bank a suggests little over 11,000 or 0.1% of adults are without an account (here)] and moved collaboratively to SEPA Credit Transfer at a national level long before any deadlines, yet with tight usuary laws that restrict the growth of credit products and a growth level of ecommerce well below that of neighboring markets. And of course, mobile payments have been a reality here since well before the dotcom bubble was an unchewed piece of gum. So are they well used? Not really – and the reasons why are pretty simple. Firstly to make it available on every handset, m-Banxafe is built using SIM toolkit technology and so it has a text-based menu [updated with an app in 2011 (here)] – this meant that it was neither appealing nor easy to use. Secondly, in being ahead of the curve with all other forms of electronic payments – particularly standardised formats and messaging for credit transfers – mobile payments weren’t massively relevant to that majority of the population. The major use cases for m-banxafe are typically directly relevant to the mobile world – paying directly for mobile credit top-up (here), and paying for mobile services – however, the relatively high cost per transaction (0,25 EUR) and high minimum transaction value (6 EUR) basically restricted the places that the system could be used.
Which brings me back to this week’s announcement from Bancontact/MisterCash (here) ready to be paraded at MWC – a new app-based system to allow payments from mobile to mobile using their system. With the introduction of a more consumer-friendly app they seem to have addressed the first issue with their original system, and again it is a very early nationally-interoperable rollout, but there’s no mention of the second issue – the business model.
Success of a payments product is very much dependent on consumer and merchant acceptance that it somehow enhances their lives – either fiscally or improved convenience. In a P2P payment, if using my mobile costs 25 cents, but giving you cash costs me nothing, why would I use my mobile? Likewise, if paying you immediately costs me more but you can wait until I get home/to the office and send money via e-banking, then why would I choose the costly option? And herein is the challenge for mobile payments – it can’t cost any more than existing payment methods per transaction, either for consumer or merchant; it certainly has to be easier to use than the alternatives; and finally it needs to be accepted wherever I want to pay: whether P2P; retailers; eCommerce; mobile commerce or SMEs delivering services to my home – one payment method that works in all circumstances in the same way.
So while you’re visiting MWC or reading the myriad of mobile payment press releases in the next few weeks, evaluate each on simple criteria to work out which will likely be a success:
- Does it make life cheaper or easier for the consumer?
- Does it make acceptance lower cost for merchants?
- Is it based on standard existing payment methods that make it globally applicable?
- Is it likely to become ‘cool’? (e.g. none of the above yet stylish, and with a cash-rich company bankrolling the marketing)
If it doesn’t pass these simple tests, it’s unlikely to become mainstream and be constrained to the pile of lessons learned.
- Experts wonder about mobile payment regulations (lexingtonlaw.com)
- Mobile payment firm iZettle introduces chip and pin technology (venturevillage.eu)
- PayPal Here mobile payment system coming to Europe with new hardware (theverge.com)