The mobile payments market has long been gestating in developed markets, and is now finally starting to gain momentum in terms of product launches and levels of investment from significant players across the financial services, IT, and telco markets.
However, it is clear that the market is unlikely to reach a big bang moment, and will instead continue to evolve on several fronts at once. What this also means, however, is that market entrants must think beyond existing business models to find a means of creating a financially viable mobile payments ecosystem for all parties involved.
Key to this is understanding that mobile payments are not a vertical market. Players must understand how the different participants in a payment system – the merchant, issuer, and consumer – can all benefit through mobile. Only through a combination of established payment technology and the new world of mobile can mobile payment players hope to reach their true potential.
Mobile payment growth is now irreversible
Mobile payments have seemingly been on the verge of mainstream success for a long time now. Following numerous false starts and stops in most developed markets with an established payments infrastructure, consumer-facing, commercially viable mobile payment systems are now live and in growing day-to-day use. Although not occurring as rapidly as initially hoped, mobile payments are finally shifting from a hype phase to a growth phase across various products and services in these developed markets.
In the 15 years since the launch of the world’s first mobile payment service – an SMS-enabled Coca-Cola machine in Helsinki – mobile payments have remained frustratingly far away for many potential players in this emerging payments ecosystem. However, while the big bang moment of mass consumer uptake has not occurred, mobile payments have instead developed and will continue to develop in more of an evolutionary rather than revolutionary style on multiple fronts simultaneously.
From a consumer viewpoint, mobile payments, particularly in the form of mobile commerce, have crept into common popular use and prove that consumers are willing to use their mobile devices as payment tools. Major retailers such as Amazon and Wal-Mart report a huge shift in growth in transactions through mobile channels, and are making mobile an increasingly central platform for retail.