Mobile Payments Night at the MIT Enterprise Forum

The MIT Enterprise Forum of Cambridge recently hosted a panel on mobile payments.

The mobile payments/mobile wallets space in the U.S. is still highly fragmented. Merchants want to accept any form of payment that reaches critical mass but are understandably reluctant to invest in new point-of-sale devices or technologies in advance of customer demand.

Q.    So, when are mobile payments going to take off?

A.    When someone develops an application that lots and lots of consumers want to use. One that solves a real problem and has a real consumer value proposition. One that is materially superior to their mobile payment mechanism of choice – the credit card.

Americans today see no reason to pay by smartphone. According to the results of a recent poll by Harris Interactive:

“Interest in using a smartphone to process in-person payments instead of cash or cards has dropped slightly since last year among Americans as a whole (27% 2012, 24% 2013) and more notably among smartphone users (44% 2012, 37% 2013) most.”

Our MITEF panel took place on the same day the underwhelming ISIS mobile wallet was finally released to U.S. consumers nation-wide. Neither ISIS, a consortium of phone companies, nor MCX, the merchant entrant in these sweepstakes, are likely to succeed.

Neither has been designed with consumer benefits in mind. ISIS is an attempt by telcos to insert themselves in the transaction solely to extract an undeserved toll. MCX feels like the latest move in an ongoing grudge match between merchants and card networks over interchange fees.

Consumers aren’t interested in siding with merchants, or card issuers, or telcos. And, it doesn’t matter to them which technologies enable mobile payments (sorry, NFC fans). They simply don’t – and shouldn’t – care.

A few final thoughts:

  • No single payment app wins.
  • The mobile commerce payment capability will disappear into the mobile app. (Keep an eye on Paydiant (http://www.paydiant.com/).)
  • Payments aren’t really the important part of mobile payments. It’s all the other things that come before the payment – offers, loyalty, etc.
  • Monetization of data may be the biggest opportunity in mobile payments/wallets/money.