The customer must be King in mobile payments
Payments New payment technologies cannot succeed unless they offer real benefits to users and lower costs for merchants, otherwise they will never replace cards, cash and cheques.
New payment technologies must offer real value to consumers if they are to live up to the hype, according to Paul Rodgers of Vendorcom, the Europe-wide forum for the payments industry.
Many of the advanced payment systems exist more to conquer new markets for the vendors than bring real benefits to consumers or retailers, Rodgers believes.
"The payments industry is getting on the mobile bandwagon to excite the merchant market because, frankly, a lot of the stuff that has been brought in in recent years has been for the benefit of the payments industry and not of the merchants," he says. Technology companies such as Apple, Samsung and Google are invading the space previously held by the banks and credit card issuers. The aim is to get in first and establish a lock on the emerging world of digital money.
Companies such as Apple, Samsung and Google are invading the space previously held by the banks and credit card issuers
The problem is that it does not offer consumers a truly compelling experience, Rodgers says: "Mobile payments are no different from presenting a card, it is more a matter of identification and can be slower."
Apple Pay's flagship project, London Transport, has been dogged by reports of delays and double charging. "Using Apple Pay is a good way to get vilified by fellow travellers because it takes twice as long," Rodger says. "As we see with Apple Pay, if we try and link a payments system with what is essentially an access system, we get ourselves in a bit of a muddle. It is important that the payments industry understands that the future is going to be lead by retail objectives and if they don't get that they won't have a market."
The turf war is currently being won by the tech companies at the expense of the banks, Rodgers says, because the banks have failed to keep in close touch with their customers.
The turf war is currently being won by the tech companies at the expense of the banks
"Apple and operations like Facebook are the owners of the consumer relationship. Consumers engage with them much more than they do with their banks," Rodger explains.
However, the long term future may well belong to the banks because they can offer cheaper transactions, Rodgers believes: "For me, the longer term future is more around things like direct to bank account payments and we have seen bank-initiated systems like PayM and Pingit offer real potential as very useful lower cost payments."
But there is a future for everything, Rodgers predicts, even old-fashioned notes and coins. "One strong message is that nothing in the current landscape will die. We hear lots of ridiculous messages coming out of the industry such as the death of cash or the death of the cheque - the truth is, nothing is going to die but equally nothing is going to be mainstream. Apple Pay will not dominate, we are going to see a lot more choice but also a lot more confusion as merchants deploy many more acceptance models. The customer experience will be the major driver."