“Is that a Windows phone? Uh, sorry about that…. we only accept payments from Apple devices.”
The absurdity of the above statement is crystal clear. Basic transfer of money from one party to another in exchange for goods and services shouldn’t be this exclusive. Yet, this is where we find ourselves today.
Did we just unveil the new “we don’t accept American Express” of our generation?
Closed and restrictive payment systems don’t expand economic prosperity, they hinder it. Recent articles questioning if we really need NFC payments, and the lack of democratized payment systems highlight how far we are from a mobile payment utopia.
In this utopia, I see a democratized world where the device you have in your hand doesn’t determine if you can pay for your daily sandwich. Mobile payments needs to grow up significantly if it’s going to be worth more than a trillion dollars by 2016,
For the last one hundred years, innovations in payments have continually struggled with how to improve on the experience of paying with cash. In the early 1900s, department stores issued their own proprietary cards that could only be used at their place of business. It was great for the business (loyalty and customer service) but less so for the consumer (exclusive and subjective). Today, the one thing more commonly carried than money in our society is a cell phone, which is making it the most logical form of payment going forward.
Ironically, many companies innovating on mobile payments today are focusing their attention on a new kind of proprietary “payment mechanism” in the form of isolated apps, NFC required devices and other exclusive components of a mobile device. Peering outside the pin-needle sized, early-adopting Silicon Valley elite, you will discover roughly 6 billion mobile subscribers worldwide – an astonishing 85 percent of the world population. Also important to note, 95% of these individuals don’t carry an Apple device. And moreover, 75% of the world is still not using a device generally regarded as a smartphone.
Let me state that another way: There are 4.5 billion people in this world holding a phone, just NOT holding a smartphone.
So why is there so much focus on a mobile payment experience in which only 5% – or at max 25% – of the world can actually participate? Shouldn’t we look at what all these devices have in common when we are designing an experience as universal as payment? I fear we are leaving too many people out of the game and too much money on the table.
General media coverage concerning mobile payments has focused on the in-store retail experience, where companies such as Square, PayPal, LevelUp and others (including the NFC offerings) are creating new ways to complete transactions with the use of apps on a mobile device. Unfortunately, billions of people in this world can’t download smartphone apps. The fragmentation of proprietary systems and their focus on an elite market dismisses the payment needs of the vast majority of humans on the planet. The mobile payment methods of the future must be device and OS agnostic. There is just no way around it.
To make a clear point: our world is complex and only ‘one’ mobile payment platform is not enough. I applaud the larger players for their innovation and market leadership, and definitely believe pushing the limits of what’s possible needs to continue. But further evaluation of the payment experience shows the in-person, in-store transaction is just one of many different payments we make during our everyday life. A very large hole is opening for players who want to address the broader public markets of payment.
Just one of those areas to be addressed are transactions that don’t involve proximity. At Seconds, we call these single party transactions and at an estimated $100 billion we feel it is an extremely underserved market. We discovered a device that can text is a device that can transact, which makes payments available to the 6 billion people who hold mobile devices today. This opens up mobile payments to be made anywhere, at anytime, by anyone. Most people just want to quickly make a payment and move on with their life. We found people prefer this over online payments because it only took a few seconds to make an easy (and secure) payment through a text message. Sometimes simplicity is the ultimate sophistication.
So how can mobile payments become a trillion dollar industry?
- It is estimated by 2016, application-to-person (A2P) messaging – messages between a user and an automated application – will transform industries such as financial services, advertising, marketing, business administration, ticketing, television voting, bill payments and more. It is set to overtake person-to-person (texting) in just a few years time. What if your payments were driven the same way? Who said messaging was only for communications?
- Facebook and your payment identity. Imagine if 900 million people had a simple payment credential attached to their Facebook account and with one click inside or outside their walls you were able to complete a transaction? Facebook credits and payments could be the airline miles of the next decade as consumers are rewarded with Facebook Credits for brand loyalty. Facebook has all but admitted it doesn’t get mobile, so looking at real world payment identity is something it should seriously consider.
- What about Google search? Or more specifically mobile search with quick payments. Google has estimated almost half of mobile searches are locally oriented and purchase intended. A logical evolution for mobile search is toward instant mobile transactions, which would also qualify as a single party transactions.
- Foursquare Check-ins. I am quite surprised Foursquare missed the payment boat, offering users the basic check-in functionality but no way to transact with a business. Why not drive payments within the quick check-in user experience?
- Twitter Payments. Through simple retweets and hashtags, people should be able to automatically purchase offers and flash deals. Imagine concert tickets or other events being released exclusively through Twitter…
- Using your mobile number for online purchases. Imagine being able to type your number into any screen or interface, receive a security/confirmation message and be done with a payment. No more pulling out the credit card and re-entering numbers at new websites.
Undeniable, the mobile payment wave is coming. The question is, will we unify a common platform and allow the rest of the world in or will the exclusive fragmentation remain? The wave will crest once the majority of people have an opportunity to participate. Better start paddling.