Have you used your mobile phone to pay for anything yet?
It seems such a great idea, particularly if you don’t need to go to a cash register to pay. How much time is wasted queuing at a till? How many years before we look back on the early 21st Century as that quaint time when people still stood in a line to pay with paper? Mobile payments will have a huge impact, when they eventually take off. Individual retailers’ worlds will change: think about newspaper, confectionery and bookstores in airports. Nobody wants to spend any time paying, and we have only recently seen the move to non-attended tills. The queues are still there. The retailers still have to use up a huge amount of space to manage queuing and transactions.
The impact on peer-to-peer transactions will be much larger. Imagine if you could send money directly from Europe to somebody in the developing world without any intermediaries? This will revolutionise how charities work. It will also be a huge stimulus for economic growth between the developed world and developing countries. People who have previously had no bank account will be able to work and submit their work via phone, the same device on which they will be paid and which they can then use to purchase goods and services.
So why is this not happening faster? I found some good data and comment in the latest Anthemis Newsletter: trends in mobile payments. here two key elements:
- in 2012 61.2% of handsets delivered globally were not smartphones
- SMS is the dominant access technology in developing markets due to the constraints of the mobile devices used and the ubiquity of SMS
As far as the developed world goes, I refer you to the question at the top of this post. Is it more convenient to pay with a mobile phone at the moment? is it more secure? Not enough, is the answer. I am convinced that securely reducing friction in the payment process will bring huge rewards to those who achieve it. On a personal note, I will favour a retailer who offers me a Paypal checkout option over one who forces me to go downstairs and fish out my credit card. Paypal saves me hours of time every month.