Mobile payments adoption remains stymied by hurdles

Two major European mobile operators—France Teleocm Orange and O2 UK—recently suffered significant network failures leading to millions of their customers being unable to access voice and data services for many hours.

While this is not an unusual occurrence, the fragility of wireless networks does have wider implications other than the loss of basic communications—after all, you can still pick up a fixe-line phone and call someone (a fast-dying art, I appreciate).

The real impact on consumers of a network collapse is to undermine any burgeoning faith they might have in using their handset for mobile commerce, in its broadest sense.

Having decided to make a purchase using an m-payment service only to find the service unavailable will be irritating and potentially embarrassing. Reaching for your L-wallet (that more traditional "leather-bound" item) will then become necessary as the sales assistant or bartender raises a sceptical eyebrow over your ability to pay.

Using NFC-enabled handsets does provide a more technically reliable route, but consumers remain unsure over the level of security NFC provides (albeit unfounded) and the complexity of the overall solution.

Putting aside these issues of network resilience and consumer nervousness, the m-payments ecosystem appears to lack any solid foundations.

News that a group of Dutch banks and mobile operators will scrap their m-wallet joint venture is one example of these grand initiatives stumbling to find a business model that works for those involved, and yet still provide the consumer with a reason to adopt the service.

The chief reason for these JVs ending in the recycling bin is that the margins associated with financial transaction are so slim (and getting slimmer) that the rewards are miniscule when split across the partnership.

Given that current non-mobile payment schemes already involve the merchant, issuer, acquirer and the card scheme, can the margins for a mobile service support the addition of the operator and others such as the handset vendor, m-wallet service provider, etc.?

Also, what real value do m-payments bring to the merchant, given they will need to invest in new terminals and train staff on this new payment mechanism?

However, the deciding factor in the uptake in m-payments remains the consumer. While the technology and partnership issues will likely be resolved, convincing the consumer there is real benefit in using a handset to make a purchase still seems like a distant hope.

And to abbreviate something that comedian Richard Pryor said: "It would be nice to have someone care about me, for who I am, not about my wallet."--Paul