By Phil Asmundson
Mobile payments are coming. What will they look like?
What can’t consumers do with a mobile device? It’s becoming a shorter list every day. And soon, paying for goods and services is anticipated to be another one of those things that we can’t remember doing before the mobile revolution. For consumers, it’s not so hard to imagine. But for those of us in business who are responsible for making it happen, there are as many questions as answers. Is it coming? Yes.
In our recent survey of 89 senior executives from a wide range of companies with close ties to mobile payments, respondents predicted that more than 24 percent of all mobile subscribers in the U.S. are likely to be using mobile banking in 2012, and more than 5 percent are likely to execute transactions on their phones for mass transit, fast food, or digital goods.
Exactly how this will happen, with what technology, and where and when have been the subjects of considerable debate – and probably a few sleepless nights. But as with all things mobile, everything is coming into focus in a relatively short amount of time.
Likely business models
Using mobile devices embedded with virtual credit and debit cards to pay for retail goods and services will likely require clear consensus about how to partner, collaborate and share revenue. The two most likely business models, according to survey respondents, are teaming partnerships between mobile carriers and financial institutions, and an open federation model that brings together mobile carriers, financial institutions, merchants, and others to deliver multiple payment services on a common platform across different devices. Forty-three percent of respondents indicated that partnerships between mobile and financial organizations are most likely, and 26 percent pointed to the open federation model.
When it comes to revenue sharing, the picture is a little less clear – but some trends are emerging. Other viable models include merchants paying fees to mobile carriers and mobile carriers charging end users. While financial institutions have traditionally been reluctant to share merchant revenues with carriers, that position may be softening. Nearly 50 percent of financial institutions surveyed support sharing merchant revenues with mobile carriers.
The fast track to adoption
It’s not hard to imagine a future in which virtually everything can be bought and paid for with no more than a wave of a mobile device. But where is this revolution most likely to start? Products and services that benefit from high transaction velocity are the likely suspects. More than 70 percent of survey respondents believe that mobile payment would likely have the greatest traction in mass transit, thanks to a large user base and high transaction volume. The fast food and retail sectors were also singled out by respondents as key areas in which to focus.
The killer app?
The Near-Field Communications (NFC) platform is emerging as a viable ecosystem for U.S. mobile payment strategies. It allows two autonomously powered devices to wirelessly communicate at short distances. Twenty-seven percent of survey respondents think it will likely become a killer app for mobile payments – more than any other technology.
Grab some popcorn
With so much on the line in mobile payments, there’s still a lot to be determined. That’s what makes it so interesting to watch these days because today, nothing is set in stone. Who will be the first to break away? What will be the winning model? Where will mobile payments finally catch fire? It’s anybody’s guess – but these survey results point to some emerging trends worth your attention.
A Response from an Industry Leader
at Deloitte Research
Near-Field Communications (NFC) platform
This is great. One question, though: you say that NFC is pulling out front in the race to be the killer app for mobile payments, but it’s widely known that NFC-enabled handsets are few and far between. Any ideas on how NFC will close the gap with such limited reach?
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