Mobile payment catches on

It was a great idea, wasn't it? So why didn't the market ever really warm up to it? That's the question we're constantly asking ourselves whenever we hear the latest news about an electric-powered car or colonies on the moon. Great ideas, but none of us is ever the first in line. It's the same technological conundrum facing so-called mobile wallets.

Given the fact that we provide store layouts, inventory, and omni-channeling a lot of thought in our retail practice, we can't help but think that mobile payments is a great development. But the simple fact of the matter is that in many of the developed markets, consumers have not been weaned off their credit cards or cash yet. I read a report that cited research by Gartner that says worldwide, mobile payments reached $235 billion last year, up from $163 billion the year before. In North America, consumers spent $37 billion on mobile payment systems, up from $24 billion in 2012. This discrepancy is a testament that consumer behaviour can be a tough nut to crack.

It also doesn't help that there are many different enterprises involved when it comes to making a mobile payment work. According to the report I read, the complexity involves the fact that these parties are in different industries and one transaction can sometimes involve banks, retailers, wireless companies, payment networks and even the companies that build the mobile wallets. So it's not exactly easy to get a merchant to sign up for a mobile payment system is he has to deal with all these different parties.

I thought that the one place in the Western markets where mobile payments would take off like wildfire would be at Starbucks. The coffee chain prides itself on rushing its innovations into practice ... on the rare occasion with disastrous results. But they're the ones who fully admit that the results can be less than stellar once in a while. The company reckons on average it is worth rushing innovations to the market because its income statements and balance sheets don't lie. It is a very profitable company, so it is sticking by its quirky formula for innovation.

It was in keeping with their quirky culture to rush innovations to market that Starbucks entered into an agreement with a major mobile payment system. But I keep seeing reports in the press that say the partnership hasn't been the run-away success that both companies had planned. I say: Big deal. These disruptive innovations take time and I'm guessing that Starbucks customers will soon be opting for mobile payments.

The author is Rajashekara V Maiya, associate VP & head, Finacle, product strategy, Infosys.

Re-printed with permission. Link: http://www. infosysblogs /infytalk/2014/04/mobile_payments_ catches_on.html