Is 2012 The Year for Mobile Payments?

September 26, 2011 by Lisa Oshima | Developers, Mobile, Monetization

I’m at Mobilize 2011 in San Francisco, and the “Mobile Payments 2012: Will This Be The Year?” is kicking off.  I share my notes below…

Karen Webster, CEO of Market Platform Dynamics is the moderator. Panelists are:

  • Brad Greene – Senior Business Leader, Visa
  • Chris Hylen – VP and GM, Payment Solutions Division, Intuit
  • Dave Talich – VP, Global Product Management, Verifone
  • Laura Chambers – Senior Director of PayPal Mobile, Paypal

Brad Green from Visa thinks that 2012 will be a “transitional year for mobile payments where we move from pilots and trials to real, full blown deployments, but we still think it’s going to take several years before we see critical mass adoption.” The key to getting mass adoption is going to be getting retailers on board. For merchants who upgrade their infrastructure to enable mobile payments, Visa is going to waive the PCI compliance audit for retailers. This is an expensive and time consuming process, so this will be a great incentive for merchants to upgrade. In 2015, for merchants who don’t upgrade to mobile payments, they’re going to do a liability shift, where merchants will hold the liability from the bank to the merchant… Another “strong incentive” to get merchants to upgrade…The crowd laughs.

Chris Hylen from Intuit feels “Incredibly good in its ability to lead in payments.”

Laura Chambers from Paypal says that Paypal started re-investing in mobile about 5 years ago.  Paypal says that offline merchants have approached them to help them get into mobile payments.

Dave Talach from VeriFone says that the lack of expectation at the brick and mortar stores for mobile vouchers has fueled the lack of consumer and retailer adoption. Verifone has historically provided many point of sale devices, but it’s a “green field” for mobile payments. The company that builds relationships with retailers is going to succeed. Where you’ve come from isn’t exactly where you’re going. Talach believes that with NFC – A certain amount of experimentation is useful. “Success lies with simplicity…I personally believe in NFC because I believe that it’s the ultimate personal technology.”

Chambers Paypal will do $3B in payments this year, and not a penny of it will be NFC. “I would agree NFC is a great techology… I think it’s going to take a while…. We’re talking about a 3-5 year window.”  There’s a lot that needs to get sorted out around who is owed what when NFC is used, and it’s a lot to work out. “Merchants won’t invest until they see it going to happen.” “At paypal, we’re not going to wait 3-5 years,” which is why Paypal announced some other mobile payments

Greene says Visa is going to be supporting Google Wallet and ISIS.

When asked about what they think of Google Wallet… There was no consensus… Hylen thinks that it’s Google’s “Plan B” to Google Checkout. Talach thinks Google Wallet is going to be a catalyst. Chambers feels that it is “narrow.”

Hylen says that Intuit is placing a series of bets, of which NFC is one. They’re focused on embracing the current enviroment and “being on the forefront of change.”

Greene from Visa says they’re focusing on “Trust, reliability, ubiquity, and merchant acceptance” while layering on new features/value adds, and he’s confident consumers will adopt it. Visa’s existing business mitigates this. If things move quickly, great. If not, they’re still operating a thriving business.

VeriFone is implementing NFC and Google Wallet initiatives. NFC is nice because it leverages proven security standards that the big card processors have used in the past. Most if VeriFone’s IP is in security systems. They ship 3.5 million devices a year, and their goal is to make sure fraud is limited.They want mobile interaction to blossom.

Chambers views the biggest challenge in mobile payments is “the hammer syndrome…When you’re a hammer everything looks like a nail.” Paypal is trying to build a system that is broad but flexible. Pushing something new onto merchants won’t work, so Paypal is trying to introduce changes that appeal to merchant’s existing behavior, while bringing value to merchants and consumers.

There’s a question from the audience… “How do you view peer to peer payments?”  Chambers says that Paypal is finding that people are using peer to peer transactions as a way to substitute cash. It’s a big market. Mobile is a great use case for peer to peer. Hylen agrees with Chambers. Peer to peer is important. “To ignore it would be a big mistake… And, it’s growing.”

Second question from the audience… “How are you going to transition the consumer. It’s got to be about adoption from the consumers, not pushing it.” Chambers says it’s “not about just payments.” Paypal is thinking more about the end-to-end solution. Paypal finds that for consumers the digitalization of coupons is important, but people will need a reason to change their behavior.  Talach believes that paper receipts and coupons is a problem. He wants to see consistency to the consumer. One company may be a single tap, one double… Confusion is a bad thing.” Green says “In this country, payments work pretty darn well.” To get into a new value proposition, you need to add value. That’s why Visa is also looking at emerging countries to add value to unbanked consumers to “provide for the first time basic financial services to people have been previously restricted to cash.”

Another question from the audience…In other countries, mobile payments have taken off, but we don’t seem to be pushing consumers like they are in Asia. Chambers says that Asia, Australia, and Europe are growing strong, but there are also a lot of people doing mobile shopping in America. “I wouldn’t underestimate the appetite of Americans to do mobile shopping.”  Innovative merchants know that people are price comparing and buying on mobile in bricks and mortar stores. Talach says that US is under pressure to go beyond payments – to add value. The international community enables mobile payments, but the pressure is on for US entrepreneurs to

Final question from Webster…Is 2012 going to be THE year of mobile payments?

Chambers says no. 2012 is going to be an important year in the growth curve of mobile payments. We’ll see experimentation, pilots, etc. In 2013 and 2014, we’ll see mainstream adoption.

Green believes its more true than false, but we’ll still be a few years off from ubiquity.

Hylen says it’s false. The 2010s are the years of mobile payments. “We’re not quite there yet. It’s all about innovation, but it’s going to happen over many years.”

Talach says, “Success lays in years of hard work, not in a year of magical work.”

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