Through a special arrangement, what follows is a summary of an article from Retail Paradox, RSR Research's weekly analysis on emerging issues facing retailers, presented here for discussion.
Until technology, standards, and security issues get resolved, widespread market adoption of mobile payments won't happen quickly. Netting out the current state of mobile payments, it seems like "Beta vs. VHS" all over again, and there is no assurance that the best solution will win — or even that there is such a thing as a "best" solution.
And while each of the players — ApplePay, CurrentC, Google Wallet, PayPal, etc. — may be hoping that they will become the "VHS" of mobile payments by virtue of the greatest consumer acceptance, this isn't video entertainment we're talking about, it's people's money.
I remember asking a C-level executive at Duane Reed (pre-Walgreens), "What kinds of payments does your company support at the point of sale?" His response: "If a customer offers us money, we want to take it. People come from every corner of the planet to our Manhattan stores, and we never want to say 'no' to them."
That sounds like a sensible approach. But mobile payment adoption is dependent on a lot of things beyond retailers' control.
At the recent RVCF (Retail Value Chain Federation) Conference in Scottsdale, Marianne Crowe, VP of payment strategies at the Federal Reserve Bank of Boston, first outlined the reasons why mobile payments aren't just likely, but inevitable. These include the rapid adoption of smartphone technology, mobile banking (deposits, bill pay, etc.) becoming mainstream, mobile payments for mass transit and online already increasingly common, and a plethora of emerging payment technologies.
At the same time, Ms. Crowe pointed out the biggest inhibitor of all — consumer attitudes about mobile payments (from a Federal Reserve Bank consumer study):
- 76 percent of consumers think cash or the familiar debit/credit card format is easier to use;
- 63 percent of consumers are concerned about the security of mobile phones; and,
- 61 percent "see no benefit."
So, given the state of flux in mobile payments, what should retailers do right now?
"You need to get something into your stores so that consumers can start getting comfortable, whether it's QR coded like the Starbucks card or NFC contactless," Ms. Crowe said in an interview with RSR. "As better solutions come along or you want to add solutions, you'll at least have a baseline to work from."
It's a good time to test "because the volumes of transactions are still relatively low, and the market is still immature." Indeed, one solution isn't expected to arrive in the next few years because "not every consumer will want to use the same thing," and different options are arriving for iPhone and Android users.
Ms. Crowe's final words of advice? "Everybody needs to stay calm, and not stifle innovation."