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The F-word and mobile payments 2.0

When I discuss my excitement over the rapidly changing Mobile Payments industry with family and friends they just don’t get it. Sure, they are familiar with Apple Pay and yes, they understand that if they had the new iPhone or Samsung 6 that they could possibly pay for things using their phone but overall they just don’t care.

I tell them that big changes are coming for mobile payments and that they will be able to leave their cards and possibly your entire wallet at home and use their phones as their virtual wallet to make purchases and much more. No excitement at all.

Leave your wallet at home

You’ll be able to pull up to a gas station and the pump will recognize your car and/or phone, who you are and you’ll be able to pay, earn rewards and have a receipt sent directly to you without pulling out your wallet. And the more you use mobile payments at the pump, the more rewards you’ll earn to use towards discounts on gas. PayPal already announced a product like this in a partnership with BP in the UK.

I explain that soon you be able to receive location based offers and coupons that will be sent to you through your phone based on where you are within a store. The service will incorporate your past purchases and predict what you may want to purchase in the future and offer discounts and coupons that you will actually use, through your phone. Descriptions and details of products can be viewed on your phone and you can even summon a customer services representative to help you with a purchase via your phone. All of these features will make the shopping more interactive, personable and relevant.

I tell them that soon you will be able to order food from your favorite restaurant, pay for it and pick it up without leaving your car or pulling out your wallet. Visa just launched a pilot program in California with Pizza Hut like this.

I also mention that much like travel rewards programs, through United, Marriott, etc., mobile payments will include their own loyalty programs that will allow you to earn points to be redeemed for future purchase or discounts.

Also in the future, mobile phone person to person transfers will become ubiquitous making the process of ‘squaring up’ simple and easy. Remittances like rents, lawn care, and child care, etc. will no longer require cash and will be easier to manage and track due to the digital footprint.

Nothing but blank stares.

Is the consumers’ lack of vision for the application of mobile payments more accurate than mine? More to the point, will the potential possibilities of mobile payments ever come to be realized by the average consumer?

Up until this point, the entire ‘buzz’ around mobile payments has been about the technology or platform being used; NFC, QR Code, Tokenization, Bio-authentication, etc., which isn’t exactly exciting to the consumer. But from an industry standpoint, this makes sense. Get the platform in place, make it secure and then release Payments 2.0 that includes the value added services and benefits of using mobile payments that I described above. In other words, all the good stuff that consumers will get excited about will have to wait until the payments providers get it right.

The F-Word

Whether it’s forged checks, fraudulent wire transfers, prepaid cards used for laundering money, the payments industry is a prime target for fraud. There is a long standing cat and mouse game between providers, regulators and fraudsters that will heat up as mobile payments offerings are rolled out. Apple Pay is experiencing their first bout of fraud as criminals find the cracks in the system and pour in. The WSJ reported that a whopping 6% of Apple Pay transactions are fraudulent despite the fingerprint requirement.

But the fact is, the more ways a consumer can make a mobile payment, the more opportunities there is for fraudsters to apply their trade. The F-Word is keeping consumers from realizing the richness that mobile payments can provide in their everyday lives and preventing the release of many value added services. Before the mobile payments industry can deliver on all the cool promises of a Payments 2.0, the industry will have to overcome the F-word.

For more information please contact Tim Spenny at tim.spenny@gfk.com.

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