The idea of being able to send and receive payments with mobile phones has been around for many, many years. Except it’s not an idea anymore. Cash, checks, and finally, cards are going by the wayside. Still, most researchers estimate that mobile payments won’t catch fire for at least a few more years. Huh? The past dictates that it’s customer behavior and not research, which serves as the best indicator of technology adoption.
In this case, customers are running toward every chance they get to use their mobile devices for payment. PayPal, for example, is projecting that it will process $7 billion in mobile payments in 2012, almost double the $4 billion mark recorded in 2011. Tap-based payments facilitated by Near Field Communications (NFC) chips that are being built into mobile devices are the next phase. (Think tapping movie posters for tickets, your home speaker system for music, etc.) Square, a forerunner of such payments (using a card reader) is being used by US Presidential candidates for campaign contributions. And there are plenty of other examples of successful experiments from retailers. All of this speaks volumes about when customers will adopt full-on mobile payment technologies. It also says a lot about the lag that exists between those who currently offer mobile payment capabilities and those who don’t.
As Brett King writes on a recent Finextra blog post ‘Forget the NFC argument – look at payments behavior’: “If Visa and Mastercard don’t convert their networks to phone-capable in the next 24 months, I fear Square, PayPal, iTunes and a myriad of others are just waiting in the wings to circumvent their rails. Argue all you like about NFC adoption, that’s not what you should be watching. The tipping point is the behavioral shift on the mobile phone – that is what will kill plastic, and it has already happened.”
The moral of the story then for banks: Stop waiting around for someone to tell you when mobile payments are going to happen. Evidently, they are happening now.