Business Insider is the latest to hype the almost nonexistent mobile payments industry with this piece plugging a new report on the space from BI Intelligence. “The habit of on smartphones and tablets is already ingrained in modern consumer society,” the piece claims, particularly among young demographics.” The report promises to explain “why mobile transaction volume is growing so explosively.”
Except, of course, that it isn’t. BI cites statistics indicating mobile transactions will account for a mere 2 percent of all credit and debit card volume in the U.S. this year, so mobile’s slice of the overall transaction pie is much smaller. And while it may be true that mobile transactions in the U.S. have seen an average annual increase of 118 percent over the last five years, that figure looks much smaller when you consider there really were no mobile transactions five years ago. BI cites the success Starbucks has achieved in mobile payments but downplays the fact that no other retailer has come close to duplicating that success.
So what needs to happen for mobile payments to gain any real traction in the U.S.? As I’ve written before, far too many competing solutions and technologies are shackling growth, so the industry must consolidate dramatically and get behind just one or two solutions. (And that isn’t going to happen any time soon.) Then retailers must be convinced to invest heavily in whichever system emerges from the pack. Once those things happen, then every player in the value chain — from retailers and advertisers to transaction companies and app developers — must build complex business models that find ways to reward both merchants and consumers. That still may happen eventually, but we’re a very long way away.