DON'T THROW your wallet away yet.
IT IS EXPECTED to take another two to four years for mobile payment
modes to catch on. -- BW File photo
Many big-name retailers from Gap to Toys R Us are partnering with banks,
payment processors and Google to let shoppers tap their mobile phones
instead of swiping their credit cards to pay for goods.
But the new mode of payment is not expected to take off in earnest for
at least another couple of years.
A KPMG study released on Wednesday last week found only 23% of consumers
were willing to use their mobile phone in place of other forms of
payment, with 30% of younger adults much more willing to do so.
And that means that all those hopes of retailers becoming more efficient
at checkout and banks finding another revenue stream won't be a reality
soon.
Shoppers in cities such as New York, San Francisco and Chicago are
warming up to the idea of paying by phone, but it will still take
another two to four years for widespread adoption, potential
participants in the mobile payment industry said.
One major obstacle to universal adoption of the new payment method is
doubt among consumers and some companies that paying with one's
smartphone is secure and easier than using a credit or debit card or cash.
Jack Koenig, a 52-year-old Broadway actor and New York resident, said he
would wait for a while before he tested it.
"I am in no rush. What is the advantage per se? Is it really that much
more convenient for me? I don't really think so," Mr. Koenig said.
"If you lose your phone, you will be screwed."
Richard Mader, head of the technology division of trade group National
Retail Federation, said, "Multiple things must come together.
Mostly, consumers need to have the right amount of knowledge and
education about the technology, and retailers must be able to accept
mobile payments."
Others agreed.
"Just the act of paying with your phone is a new thing for most of us.
We're also working hard to educate people about why mobile payments
represent the future of commerce," said Marc Freed-Finnegan Sr.,
business product manager of Google Wallet.
Still, it is hard to ignore the small but growing pay-by-phone market.
Research firm Aite Group expects the pay-by-phone transactions to total
$2.1 billion in 2012 and $22.6 billion by 2015.
While the long-term potential seems huge, near-term hurdles related to
security concerns, availability of contactless payment machines and
installation costs for retailers are working against the initiative.
Currently only about 500,000 NFC readers (contactless payment machines)
have been installed at retailers' point-of-sale locations, or checkout
registers, in the United States.
"We feel that it will take time," said David Marcus, vice president of
mobile at eBay's PayPal unit. "We don't want to…solely rely on NFC to go
offline in a big way."
PayPal is watching developments in mobile payments but also getting
ready to roll out a "wallet in the cloud" initiative that lets shoppers
pay using their computers, cell phones and cards that give access to
their coupons, or by simply typing their mobile number and pin at
checkout counters.
Amid other challenges, 71% of 970 companies surveyed by KPMG said they
believed they must overcome security concerns to succeed in mobile payments.
And changing that will take time.
"2012 will be about a beta and expanding that beta test. It will take
some time for these this to become mainstream," said Thomas Kunz, senior
vice president at PNC Financial.
Mr. Kunz oversees the Pittsburgh-based bank's payments and e-business.
"There are 11 million merchants in the United States, and nobody's being
paid to make this change," Mr. Kunz said.
"Using a phone instead of a card is not such a big deal, at least right
now."
So far, US wireless operators Verizon Wireless and T-Mobile USA have
joined with Discover to form a joint venture targeting mobile payments.
Wireless competitor Sprint meanwhile has joined with a host of companies
in a another joint venture.
In it, Google will supply Google Wallet software that today can hold
MasterCards issued by Citi, and FirstData will provide infrastructure
for securely delivering payment credentials to Google Wallet.
Google has also signed agreements with Visa, American Express and
Discover, and hopes to include their cards in Google Wallet, Mr.
Freed-Finnegan said in an interview.
Starbucks, which has had a lot of success with its own mobile apps due
to the overwhelming response from its tech-savvy and relatively
well-heeled consumers, is also optimistic about the potential of mobile
payments.
"It will be a big deal. It is just a matter of time," said Adam Brotman,
senior vice-president and general manager of Starbucks Digital Ventures.
Despite the lack of immediate rewards, some store chains are currently
testing the payment method, and more merchants are expected to join the
pay-by-phone bandwagon in 2012.
American Eagle Outfitters (AEO), Container Store, Foot Locker, Guess,
Jamba Juice, Macy's, OfficeMax, Toys R Us and Gap are among the chains
that let shoppers use "Google Wallet."
They let shoppers pay for goods, redeem coupons and earn rewards points,
all with a single tap of their phone.
"They love it. We did a demo event at our Times Square store in which
customers got to use loaner phones to try out the technology," said Jani
Strand, a spokeswoman for teen apparel chain American Eagle.
"It's still very early, but the goal is to make the AEO shopping
experience as fun and convenient as possible," Ms. Strand added.
"Our customers are rarely without their smartphones, so any engagement
that connects with them through these devices tends to be effective."
Currently, about 200 Toys R Us and Babies R Us stores let shoppers pay
using their smartphones, Toys R Us spokeswoman Katie Reczek said.
"We will continue to evaluate the program to make a determination about
expanding its offering to additional locations," Ms. Reczek added.
In addition to the playing the convenience card, many such as MasterCard
and Google said the pay-by-phone method is actually safer than regular
credit card transactions.
Purchases by phone are safer because of the added software limits in
place to keep people from accessing your data improperly, whereas they
can just swipe a number off a debit card illicitly, MasterCard executive
Mario Shiliashki said.
More addictive than cigarettes
"Google Wallet goes far, far beyond the protections that you have in
place for your wallet today. Google Wallet is a much more secure
platform -- it's truly a wallet you can lock," Google's Marc
Freed-Finnegan said.
Also, consumers are more likely to carry their phone than anything else,
because it has become a key social tether.
"You're more likely to leave your home without your wallet or your
cigarettes than you are your phone," Ms. Shiliashki said.
"And I mention cigarettes because the phone has become more addictive
than the most addictive substance out there," she stressed. -- Reuters
--
---------------------------------------------
CARLOS ANI - SEEDFINANCE Corporation - http://www.seedfinance.net
Email: carlosani@seedfinance.net
Landline Phones: +63495010127 and +63495762924
Cellphone: +639152919580
DEVJOBS - http://www.devjobsmail.com
PHILDEVFINANCE - http://phildevfinance.posterous.com
CONSULTING - http://www.carlosani.com
My News Clippings - http://www.myclipps.posterous.com
Family website: http://www.anifamily.net
------------------------------------------
