The long, slow slog of mobile payments in the U.S.
A Computerworld report from MobileCon in San Diego warns that consumer adoption of mobile payment technologies such as NFC won’t happen nearly as quickly as some have predicted. Widespread uptake of mobile payment applications won’t occur for five to eight years “at best,” the head of Barclaycard US told attendees, adding that mobile payments in Japan didn’t take hold for the better part of a decade.
That’s particularly noteworthy because the the market for mobile payments in Japan was almost perfectly positioned, as I’ve written before: NFC was included in many handsets years ago, the country’s massive train system integrated a mobile payments system that has become the de facto standard and Japan’s biggest carriers all came into the fold. Those factors explain why Japan has become the global model for mobile payments.
But none of those factors apply here in the U.S.: NFC penetration has been painfully slow both in handsets and at the retail level, a wide range of competing systems have emerged, and no mass-transit system exists that could drive adoption nationwide. And as speakers on the MobileCon panel pointed out, U.S. consumers are wedded to credit cards and have little (or no) reason to switch to mobile payments right now.
That will change as payment providers, app developers and retailers learn to add value to mobile transactions with loyalty programs, coupons and other goodies. But those offerings will take years to develop, and changing consumer behavior is a huge endeavor. If mobile payments took eight years to truly take hold in Japan, they could take a lot longer here in the U.S.
You make a great point regarding technology, Derek. As always, thanks for your comments.
But I’d argue that mobile payments pose a few hurdles that may be even tougher to overcome than just laying the infrastructure (which will be difficult enough). Sophisticated business models will have to be built and the mindset of mainstream consumers must be changed, both of which will take time. And three (or more) competing payments systems will slow those things considerably.
Starbucks’ initiative has demonstrated there’s some demand for mobile payments, at least among more affluent mobile users. But I still think it will take longer than most people believe to expand mobile payments to the masses.
Colin,
Entirely valid contrast between Japan’s ready ecosystem versus our dysfunctional mash up.
However, a normal acceleration takes place with technology after it already has succeeded in other markets. For example, 3G UMTS technology in Japan was also early, called FOMA. It was characterized by problems, gaffes, over-heated phones, dropped hand-offs between towers, etc. It took a couple of years to mature. Same story for Hutch when they deployed 3 in the UK.
When 3G was deployed in the USA, it was straightforward, easy, and quick.
^^^I concede that the US is not as ripe as Japan was for mobile payments, but once we start, we will mature more quickly than 8 years, because some mature technology and reference cases are available to us.^^^