M-payment fragmentation grows
As featured on TM Forum's the Insider blog
After what seems like an eternity of pondering and indecision, the finance, telecom and retail worlds appear to be embracing mobile payments and mobile wallets. Although not, unfortunately, in unison.
News comes this week that a dozen leading US retail giants are finally banding together to create their own nationwide mobile commerce network. First announced in March, the Merchant Customer Exchange (MCX) brings together Walmart, Target, Best Buy and Sears with 7-Eleven, Alon Brands, CVS Pharmacy, Darden Restaurants, HMSHost, Hy-Vee, Lowe’s, Publix Super Markets, Shell Oil and Sunoco.
Somewhat cynical observers claim the MCX has come about ostensibly to ward off the efforts of Google Wallet and Isis, the point-of-sale initiative spearheaded by Verizon Wireless, AT&T and T-Mobile USA.
When first reporting on the MCX initiative The Wall Street Journal stated that, according to sources, retailers were displeased by the inroads made by Google, Isis and other m-commerce players and wanted to reclaim control over the customer experience.
One doubts how much effect another mobile wallet will have on customers except to probably annoy and confuse them further.
Today’s consumer already has to carry a wallet or purse bulging with credit cards issued by banks and retailers, loyalty cards, coupons, discount cards, store value cards, ID cards, and so on. Now they will have to consider having multiple mobile wallets on their smartphones because all the differing camps will want theirs on the devices. This level of complexity will only result in consumers rejecting all but one or two, if that will even be possible.
Even if competitive retail groups, such as those in MCX, can actually agree on how the wallet will work and bring it to fruition (a feat that has eluded the telecom industry to date), what will make it more attractive than similar offerings from the likes of Google and the finance industry? Do they plan to veto other mobile wallets in their outlets? I doubt it.
The retailers or merchants, to use the finance industry term for them, already have a plethora of terminals and interfaces at their checkouts and every new payment method requires some investment. Questions will be asked if it is all worth it.
For consumers, going with MCX in favor of the many others may not guarantee that payments will be accepted at non-MCX outlets, severely limiting its usability. Let’s face it, loyalty lasts as long as it is convenient. Driving the extra 20 miles on an empty tank to get to a Shell gas station just won’t cut it. It’s the same buying groceries or other low value consumer items, convenience will win over loyalty.
Rumors are that the MCX group is developing a mobile application supporting smartphone-enabled purchases across all participating merchants as well as consumer offers, promotions and retail programs. Great, but so is everybody else and, yet again, the mobile network operator is being cut out of the food chain. Oh, and let’s not forget all those NFC offerings that will come into play as well.
With all this fragmentation of mobile payments, mobile wallets, NFC and mobile card payments, it is going to be a difficult sell to the wary and increasingly confused consumer. They will likely pick one or two favorite options, at best, and stick with them. If catching public transport that uses NFC is their primary concern they will go with the provider of that service, if it’s having a stored value wallet that removes the need to carry cash, they will probably go with that option.
For the providers of service, including banks, card processors, merchants, telcos and other OTT players, it is going to be a battleground strewn with casualties. Every one wants to be in control, nobody seems keen to share the transaction revenues and, worst of all, none have agreed on a standard process or methodology for the complete payment chain.
As Keith Willetts states in his book, Unzipping The Digital World, it will be yet another ‘Oklahoma land grab’ and there will be the inevitable casualties in the stampede. Sitting back and watching the carnage may be the best option.