Mobile Payment—Are Shoppers Ready for It?

Google Wallet

Source: Google Wallet | Official Website

Mobile payments are finally gaining traction in the US after years of slow advances. It could even have a boost this September, as Apple is widely expected to feature a mobile payment scheme for its next-generation iPhone. While waiting for Apple, the Isis consortium of three US carriers is expected to officially launch its first mobile payment network in Austin and Salt Lake City any time soon.

Various Mobile Payment Options

In addition to Google Wallet, the Isis consortium and Apple’s mobile payment scheme require a smartphone to enable this feature. The device must be loaded with an application to communicate with a store or location terminal using Near Field Communication chip or Bluetooth.

However, mobile payment in the cloud is now enabled by PayPal for its 50 million mobile users. In fact, it no longer needs a mobile device at the point of purchase. For example, when a PayPal customer buys goods in The Home Depot, he or she can simply enter a mobile phone number and PIN at the checkout keypad. It would then transfer money from a PayPal account to a linked back account or credit card.

Moreover, PayPal recently announced that their customers will now be able use their account to purchase goods at stores where Discover credit card is honored. This will take effect in the second quarter of 2013.

Starbucks also enables their customers to pay for coffee using its in-store optical scanner found at the checkout terminal. It reads a user’s smartphone screen to deduct money from a Starbucks card. Even Dunkin’ Donuts followed suit and announced the same technology.

There are also various mobile payment schemes available nowadays, including Merchant Customer Exchange. It is a mobile payment network announced last August 15, which will rely on smartphones and other unnamed technology.

The Underlying Problem of Too Many Options

Although it’s good to have various options when it comes to mobile payment, analysts say that it could also confuse the customers. The US already has a number of credit card options available, and might be unable to motivate users to try another payment scheme linked to a smartphone. As pointed out by J. Gold Associates analyst Jack Gold:

The fundamental problem with mobile payments in this country, compared to other parts of the world, is that users have so many options already to pay for things. If I have five credit cards in my wallet, do I need to have one or more in my phone as well?

Gartner analyst Avivah Litan also pointed out that mobile payment schemes may not hurt banks and credit card companies for the next five years, but it could make significant impact afterwards. Because of these obstacles, it may take some time before mobile payment schemes become well-developed in North America.

Leave a Comment