Mobile Payment Systems Not Rolling In Dough
By Mike Masnick, Tue Dec 14 01:45:00 EET 2004

While most of the attention in the mobile payment world has been focused on Japan, a few efforts are underway in Europe. Initial results, however, are underwhelming. Providers might want to take a few lessons from PayPal.


The efforts in Japan to push FeliCa as the mobile payment standard of choice has been well covered in the past. However, other mobile payment standard efforts are underway in Europe, and so far, the uptake hasn't been all that exciting. It's not that no one is using these (mostly SMS-based) mobile payment systems. It's just that there are many different options, each with their own advantages and disadvantages. On the whole, however, it just seems that not too many people have found the offerings compelling. Part of it may simply be an issue of education. If users don't realize they can use the phones as digital wallets, then, obviously, they're not going to use the various services.

A bigger issue may be the fact that there are so many different standards. Some of them work across carriers. Others work with a single carrier, but across countries. Some apply the charges to a credit card, while others put it on your phone bill. All of these differences also make things more difficult from an infrastructure point of view. For systems that require merchants or vendors to have some sort of equipment or service in place to set up mobile payments, having three or four different offerings to choose from makes it more likely that they'll choose none at all. This problem only becomes more noticeable as some of these standards start crossing borders.

The most important issue, however, is that no mobile payment solution is going to get anywhere if it doesn't offer a real convenience. That is, it must be easy to use and must let users do something they couldn't do before. Simply replacing a credit card doesn't cut it. People have credit cards, so there's little advantage in simply offering a different way to pay, using a phone. In the Internet world, PayPal was originally envisioned as a mobile payment solution, but morphed into an email/Internet solution once people realized that it was an easy and quick way to exchange money by just knowing someone else's email address -- and without having to worry about merchant accounts or bouncing checks.

For mobile payments to make sense, they need to offer that same level of convenience -- and make that value proposition clear to end users. The payment process has to be very quick and easy, while adding some extra benefits that simply weren't available before. It also needs to be a near standard. While PayPal had some competition, by becoming the de facto method of accepting and making payments for so many people, it was no longer a burden to ask anyone to use PayPal at all. Mobile payments are still a long way from that stage, and until they get there, uptake may remain just mediocre.