Mobile payment is expected to be the most accepted mode of payment in the future, but, recent findings show that the current pace of adoption is slower than expected. Currently in India, there are less than 10% (60 M people) of the banked customers who have registered for Mobile payments.
The question is why is the pace of adoption slower than expected for mobile payments? The situation is more or less the same across the developed and developing countries, the traction on mobile payments although gaining momentum, has not grown as fast as expected. It is expected that mobile payments (over handsets and tablets) will grow by 3.5 times in the next 5 years. Leading retail company’s are increasingly developing strategies around mobile as a hub for not only facilitating payments but also for knowing what is on the customers mind, their interests, purchase history, product discovery and customer retention.
Some of the reasons for the low convert in India are :
• The low number of smartphone users ( < 6% of total subscriber base)
• Awareness and adoption campaigns have had limited impact because of limited funds
• Telecom service providers are still trying to figure out how to play in this market
• Poor experience post download of mobile payment application
• The main issue still being around Security and Value add?
Security is one of the biggest concerns, although a mobile payment transaction is as safe or probably safer than an online transaction. The recent, much hyped phone hacking and interception of payment information, besides lost or stolen phones, mis-use of personal information are not giving much comfort.
An important point is that neither customer nor merchant will adopt mobile payments for simply the payment part of it. Fundamentally, there is nothing wrong with using plastic for payment.
The benefits and value coming from the Mobile payment have to increase, if the adoption for the same has to go up!
A normal card or cash payment is just a transaction at the check out. Whereas the payment on mobile captures many more data points like location, purchase history, loyalty related info, preferences, etc. This can be used in innovative ways to deliver a host of services to both the customer and the merchant, viz cross sell opportunities, discount coupons, price comparisons, increased basket size etc. All this is possible only with mobile.
The current eco-system and the drivers lead me to believe that Mobile payments will scale faster, because :-
• Companies are driving a realistic vision and looking at mobile as an additional mode of payment and not as a replacement of plastic.
• The shopping experience and convenience are improving with mobile payments. There is 25% growth in mobile transactions by e-retailers.
• The increased rate of adoption of smart phones ( 84% YOY growth)
• More players and options are available in the market, like paying bills online, P2P, Payment by SMS, card reading apps, scanning QR codes, NFC, mobile wallets etc
• Mobile hardware players along with service providers and payment companies are more aware of the breaches and are trying to find ways to make the eco-system more secure.
Mobile payments is going to be one of the main mode of payments and with the Governments Digita linitiative and banking the unbanked population, we can see a much faster rate of adoption. Companies will have to build their future strategies around mobile payments and leveraging Enterprise Mobility to get more data points. And use innovative means to analyze the data to add value to their customers and positively impact their business.
About the Author:
Jayant Rastogi is a senior leader in the IT and Communications industry, building new businesses and establishing and growing them. He has worked for some of the top MNC’s and Indian Enterprises .He has been a part of Enterprise Mobility from the time of its advent and has built one of the largest Enterprise Mobility businesses in the region.