The more I hear people discuss mobile payments, the more I believe that it’s actually of more importance to the industry than it is to the consumer. Polls such as Bain & Co conducted for eMarketer (here) highlight that most people are currently pretty happy with the payment methods that they have for everyday use – primarily face-to-face retail – and don’t really see the need for, or trust their mobile for these payments.
What this really means is that they don’t see mobile as a replacement for cards, which is the direction that card schemes have been pushing for the last few years in the vain hope that this will also eat into cash volumes. So what you get is a real distortion of the argument that leads to confused consumers and 15 years of mobile failure. But is the problem really with mobile, or the fact that the payments community actually still believe that there is a distinction in the eyes of consumers between mobile; ecommerce; face-to-face; remote payments; bill payment; vending machines; and any another channel you can think of.
As an industry, we’ve been really bad at understanding the transformation that the social web has created for consumers – and even worse at transforming that into payment methods that they want to use. Put simply, consumers generally don’t want to worry about the ‘how’, just the ‘how much’ and the ‘can I’. What do I mean by that? Essentially, the method of payment is irrelevant to a consumer and it’s actually more important that they know where the money is coming from and what the cost of paying is. This is why services that take away any thought from paying are so well adopted in the new consumer mind – essentially these payment methods are an update of an old solution rather than a new invention.
Take for instance Amazon, that wild and wacky webshop and it’s few hundred million of satisfied customers. When I get to the point of paying on Amazon, I’m logged on to their secure service already and am offered a selection of the payment products I’ve used before. As long as I’m not doing anything that deviates from my normal buying behavior (such as sending to a new recipient) then Amazon uses the trust from the last payment to carry over to the new transaction. So I click OK, agree to the shipping costs, click OK again and hey presto! my order is now on its way. If their method of payment screen had my balances on as well, this would be perfect. In essence, this is the modern version of a lodged card transaction, which has been the mainstay of the travel industry for nigh on 50 years – they save my details and trust is built through a payment history. If I’m a first time transactor, they’ll make me jump through a few more hoops, but essentially it’s easy. Many of the new mobile services, such as Uber and AirBnB, are taking the same approach – just say OK and we’ll sort out payment in the background using the method that you specified.
In physical retail, I essentially use about five or six stores on a regular basis – there’s the three supermarkets I use, the local garden & pet centre, and two DIY shops (I clothes shop online!). This covers about 95% of my regular spending. Why can’t these stores use the same principle? I go in once and lodge my details, providing a proving transaction. Then all I need to pay is my store loyalty card/app and an agreed token (PIN, shared secret, mobile QR code, phone number or other). If I go to another store, then I can dust off my card. As my regular store has my credentials – particularly debit credentials – they can decide whether to generate a debit card transaction or to initiate a direct debit from my bank account, knowing that I have full rights to a refund for incorrect debits thanks to European legislation. It gives them freedom to take payment in the cheapest way for them based on my past record of paying and being a regular customer.
This principle of payment is based on having the appropriate level of security for the transaction and on the simple nature of social relationships – my regular behaviour varies little and so I don’t need the strength of an EMV card if the restrictions are small (1 store, 2-factor authentication and behavioural history). What I definitely don’t need is my EMV card loaded into an expensive mobile and a multi-tiered TSM relationship with overheavy security. What I DO want is a supermarket that I can use self-scan in so that my bags are loaded as I shop; that I can get access to a short ‘regular customer’ queue; but mostly that I can hand over the scanner, agree the amount and then walk out. I don’t want to use my mobile, I want to use my relationship. After all, as former UK Prime Minister, Harold MacMillan said, “A man who trusts nobody is apt to be the kind of man nobody trusts,” surely the same stands for my relationship with my retailer.