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Cash, Card...or Mobile?

Source: Phoenix UX, 12 September 2013

With so many players in the mobile payments landscape (banks, tech giants, emerging start-ups etc) and as many payment solutions, the current mobile payments market is quite fragmented and confusing for both consumers and merchants. To paraphrase Monitise CEO, Alastair Lukies, 'In payments, there's too much that matters for disruptive approaches to become mainstream.'

Looking at the latest developments and the new players one can see that the mobile wallet competition is heating up. While MasterCard, in partnership with Kalixa Group and DeviceFidelity launched in July the first NFC-enabled iPhone prepaid mobile wallet in Europe, new start-ups promise to revolutionize (or disrupt) the mobile payments industry, such as Clinkle, an app which has a 'wallet' feature that looks like PayPal, but what sets this app apart from other mobile payment apps is the sound-transmitting technology ('phone-to-phone payments via ultrasound exchanges', although it still needs th e infrastructure to implement it).

One of the main issues that all these players need to consider is how to educate and persuade consumers that they can't live without using a mobile device to pay for their goods. Due to its fast growing and constantly changing nature, the mobile payments sector is also exposed to a whole array of risks that will challenge even the best planned strategies.

Some of these questions/issues will hopefully be answered during two upcoming events, the Mobile Wallet Summit in London (6th-7th November 2013) and the ATM & Mobile Executive Summit in Washington DC (September 25-26, 2013), both focused on the evolving area of payments, especially the mobile payments. While the Mobile Wallet Summit will focus on the latest mobile wallet developments, the ATM & Mobile Executive Summit will mainly look at how mobile and ATM technologies and business models are working together and how customers are reacting to this explosion of new technologies.

As a teaser for the Mobile Wallet Summit in London, the organizers have interviewed a few industry leaders to get their insights on mobile payments.

Katie Lips, Head of Digital Strategy and Innovation at Aimia sees loyalty as a crucial differentiator that will attract consumers to adopt mobile wallets. Interestingly, Katie mentioned that nothing that is out there makes her switch from using the plastic cards or cash, apart from Starbucks mobile wallet concept.

For John van der Heyden, Payments Project Manager at BNP Paribas Fortis, the main factors that would make a mobile wallet stand out and consequently increase widespread adoption are security and user experience, ultimately consumers want a payment solution that is user-friendly and secure.

The highlight of the other event, the ATM & Mobile Executive Summit in Washington is the presentation of a report called ' Paper, Plastic... or Mobile?' released by The Federal Trade Commission (an US consumer protectio n agency) in March 2013.

While The Federal Trade Commission is an US organization and as such focusing more on the challenges of the US mobile payments market, this report is important and relevant across the whole mobile payments landscape. The report identified three primary areas of concern that are expected to occur in the mobile payments industry: dispute resolution, data security, and privacy.

In the UK, The Payments Council's is working on regulating the mobile payments sector through a new service, which will be launched in spring 2014. The Payments Council's new mobile payments service 'will enable secure payments to be made directly to or from an account without the need to disclose the sort code and account number, by simply using a mobile phone number as a proxy'. Eight financial institutions (Barclays, Danske Bank, Cumberland Building Society, HSBC Bank, Lloyds Banking Group, Metro Bank, Royal Bank of Scotland, Santander UK) have already confirmed their participation in this scheme.

With the industry experimenting with so many technologies, it is crucial now more than ever to create a framework that will tackle all the security and regulatory challenges that payments providers are facing.

Hopefully these 2 upcoming events will contribute to building a common strategy that will speed up the adoption of mobile payments, while having the consumer needs at the core.