Mobiles drive money: cash stays king

Saturday 10th March 2012
Above M-Payment Courtesy Below Global:

Going shopping with just your smartphone is clearly possible in some US situations. It's not quite here yet, where even the credit card hasn’t quite ousted cash. But m-payments are relentlessly coming down the line encouraged by rapid adoption of mobile devices for commerce applications.

Two research reports from Juniper Research focused on Mobile Commerce Markets  and Parks Associates research over Mobile Payment-Stepping into Uncharted Territory see the growth as inevitable.

Over 50% of US broadband households want to scan barcodes for product price and promotional information on their next mobile phone, showing the rapid adoption of mobile devices for commerce-type applications of money transfers, banking, payments and coupons - and forecast as significant growth sectors,with the increasing use of mobile devices as an alternative to credit cards with paper coupons as one of the fastest growing segments of the mobile commerce market. 

Report author David Snow (right) says “Money transfer, physical goods, NFC and coupons will more than treblein transaction value over the next three years, digital goods, banking and tickets will on average, double over the same period."

Among report findings are: SMS is the key to widespread mobile banking service adoption; interoperability is essential for mobile money transfer services to gain critical user mass and mobile coupons though still the smallest mobile commerce segment, demonstrates highest growth rate. Parks Associates notes that 37% of US mobile phone owners find the mobile wallet concept appealing, with interest highest among younger households and smartphone owners.

"For consumers, the most attractive benefit of mobile payment apps is they reduce the number of credit cards they have to carry," says (left) Harry Wang, director, Mobile and Health Research, Parks Associates. 

"The mobile phone is the main device people use to organise their lives, and mobile payment solutions offer significant conveniences, including organising receipts and eliminating the need to carry cash."


While researchers haul mobile pay and push reports together, the social internet has produced the leisure shopping Apps approach which also leans to a virtual wallet approach.

Consider the New York shopper who saves items from apps and web sites on her cellphone as a shopping list and while browsing one store by trying on shoes, uses her phone to check styles and prices at the competitors’ store.

The New York Times story reports her work identity as analyst at Intel and the shop as Nordstrom, that has added Wi-Fi to almost all its stores, so its shopping App will work fast, but does not limit what people can do on the in-store devices , from shopping to checking on email.

The story notes that sensible retailers understand the attraction of touch screens to demonstrate makeup; shoe stores have iPads describe and demo their merchandise; some even offer shoppers touch screen to change both music and lighting in the dressing room/mirror environment as the shopper will consider Pinterest suggestions, Zappos opinions and Fashism information, as being better impartially and informed than the sales staff behind a counter.

Utah-based iPad Enclosures  [Anyone doing it here in the UK yet?] which installs technology for retailers, said entities like Samsung and other manufacturers were considering adding iPads offering live video chat with a Samsung salesperson at stores like Best Buy.

“You can use that kiosk to do better, in a lot of cases, than a 17- or 18-year-old sales rep,” says (right) CEO Scott Paul.


Aided by a whole innocuous series of incidents, ranging from steel 10p and 5p coins causing some UK vending business mayhem; Messrs HMRC opting only to accept online VAT and tax payments; bright eyed and bushy tailed as ever, banks and their credit card services all want to get rid of the cheque, and are willing to exchange credit cards for authenticated Smartphones, provided they get the best cut on consumer activity, more mobile pay is on the way.

Visa for one has a new service it claims provides financial institutions and mobile network operators with a one-stop solution to securely download payment account information to Smartphones enabled with Near Field Communication (NFC) technology.

Reacting, (left) Catherine Haslam, Ovum analyst commented :“Visa’s announcement has the potential to fill a significant hole in the current payments ecosystem. A major barrier for many operators is the need to build a relationship with one or several financial institutions in order to offer services. Such negotiations are typically long and complicated and this would replace it with a simple contract with Visa." 

She says Visa is doing what it’s been threatening to do for several years expanding its traditional intermediary payment role to mobiles. The fact it is also supporting non-Visa payments shows that it recognises ubiquity as key to success in mobile money systems.

Her caveat is Visa “is not walking into an open market. Competition from international financial hub systems, M-wallet and HomeSend services offered by international carrier Bank Identifier Code systems (BICS) meant that  Visa, "must establish a viable business model which operators will accept as BICS already has a well-respected model and many existing operator customers.

 The m-Wallet is an electronic wallet associated with the mobile phone. It is similar to the e-wallet (proposed by Paypal among others) and allows payments or transfers to a third party with the significant difference of implementation through the mobile. it offers, among other services, person-to-person payment, loan reimbursement and mobile top-up. Through any mobile phone, users are able to manage their m-wallet: eg, view account balance, transactions history, and save/use a list of frequent payments.

Last year Google joined the circus ring with E-Wallet,  running into a PayPal suite but both lag the original mover, Square, currently offering "Sign up and we’ll mail you a free Square Card Reader."

In the UK lots of options that seem to exist like UPay  are faces of others, in this case Uniware, while  Counter Solutions operates with some 19 partners. 

In his white paper “End of Cash” Jake Holloway (left) e-Commerce head at Xendpay says that the new kids on the payments block like Google Wallet, Square and Facecash as well as more established mobile-based payments services like M-pesa from Kenya all offer glimpses of a future without cash. 

Payments transfer, he notes, is a hot subject amongst investors in high-tech and trail-blazers who have to stay abreast of any new payments technologies world-wide that might improve the experience of people sending money overseas

"Peer-to-peer mobile services like Ping-it from Barclays and PayPal work on a different basis. Behind the 'future of payments' hype, the mobile app is simply used to securely communicate with your account once authorised by you – without using clever chips or NFC. So it’s simple with an existing customer base signed up to the service. But it certainly re-energised the talk of an “end of cash”. 

But likening this to the paperless office, Holloways asks how would you use these methods when buying abunch of flowers in a street market, or handing out pocket-money?

 "Cash," he points out," doesn’t need batteries or a signal. It doesn’t cost anything to use it or accept it. It’s very portable, not easy to forge and it’s accepted everywhere – so it’s a hard act to follow!"

Identifying the four problematic horsemen of this apocalypse as Trust, Universality, End cash Demands and Fraud/Theft risks, Holloway does concede the new payment technologies and new consumer app habits will perhaps change how trillions of payments are made, but concludes serenely that cashless is simply the new paperless society.


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