The Concern with Mobile Payments
Retailers, banks, credit card companies, and wireless providers will all lead you to believe that the market for mobile retailing and payment is white hot. Yet, for all intents and purposes, this remains a market still in the midst of development, with a fair balance of optimism and concern across many fronts.
MasterCard, www.mastercard.com, recently issued results of a survey that reveal U.S. consumers are frustrated with both the online and mobile shopping experience. While the results overall show consumers are more confident in online shopping and very much interested in using mobile devices to do so, frustration from consumers could ultimately lead to missed revenue opportunities for merchants and retailers.
Using a smartphone to pay for goods and services is a developing trend in which MasterCard is heavily involved.
Earlier this year, the credit-card company unveiled a joint venture to develop Wanda, a mobile payment solution to customers in Latin American markets. Under such an initiative, mobile payment services will be linked to a mobile wallet or prepaid account that will allow for money transfers, mobile airtime reload, bill payment, and retail purchases, among others.
The company also announced a partnership with BOKU, www.boku.com, to allow consumers to make payments, receive discounts, and monitor spending from mobile phones.
Regarding the survey, 53% of U.S. adults with a mobile device say they use the device to shop online, but they seem to have a genuine concern regarding security.
Security seems to be a prevalent issue across the board, as the NRF (National Retail Federation), www.nrf.com, is urging the Federal Trade Commission to move cautiously in establishing regulations for mobile payments. The NRF says any rules that are adopted should correspond with those for the underlying form of payment, rather than being specific to a certain technology.
As Mallory Duncan, senior vice president and general counsel, describes, we are just beginning to see the emergence of mobile technology and processes. As a result, until the market develops more, we won’t realize which practices the public will prefer or which methods will provide new benefits. Therefore, the NRF is urging the government not to impose regulations that would, as Duncan says, “… forestall yet-to-be-imagined advances and innovation in order to avoid potential ‘harm’ based largely on speculation.”
According to Duncan, the phone is “just a device, not a payment” and actual payment could take place via a credit or debit card, directly from a bank account, or be processed through the user’s phone bill, as a few examples. With that in mind, Duncan says privacy rules developed for mobile payments should be no more restrictive than those for the underlying form of payment.
As the market for mobile retailing continues to develop, many questions still remain, one of which is how to truly define a mobile payment. While some constitute something like an online purchase under this category, others argue the term should be limited strictly to the use of mobile devices like a smartphone or tablet.
Mobile payment remains an emerging market with many different players trying to establish the proper practices and methodologies. For certain, this remains a market with much potential, but with challenges still ahead.