The concept of mobile phones replacing cash is far from
a reality and end users are unlikely to demand this form of
electronic cash, analysts will announce at the GigaWorld conference
in Paris this week.
Martha Bennett, an analyst at Forrester
Research, which now owns Giga Information Group, believes there are
serious business and technical barriers to mobile payment systems.
She said operators were making the cost of mobile payments
prohibitive.
"Mobile phone payment systems have a chance if
they are cheaper and more convenient than traditional cash or card
payment methods," she said. "But merchants are hit by a double
whammy as they have to pay both the standard credit card
transaction fee and an operator fee."
In February, Paybox, the biggest mobile
payment provider in Europe, pulled out of the UK market, citing a
lack of co-operation between banks and mobile operators.
Along with operator charges, Bennett felt the
phones themselves were not reliable enough to replace cash or
credit/debit cards. She said phones tend to crash; they only work
when there is a signal and have a limited battery life, all of
which prevent them from being used to make payments reliably.
She also pointed out that consumers are more
careless with their phones than with their wallets.
Payment technology has moved forward since the
industry began touting mobile payment systems.
For example, major retail chains, such Tesco
and Marks & Spencer, are running “chip and pin” trials in
Northampton, by which consumers pay for goods directly by using a
payment card and their Pin.
Bennett said such schemes alleviate the need
for mobile payment. Another example is train tickets. "If consumers
can buy train tickets from a machine which accepts card payments,
why invest in something else?"
Even the London congestion charge SMS payment
system is not strictly a mobile payment service according to
Bennett, as it requires users to pre-register their payment
details.