Non-European countries are rapidly improving their citizens'
ability to pay for goods using their mobile phones, writes
Elodie Franceschini, director at TNS Technology.
Although there have been promising trials in the UK, concerns
over privacy and security may delay the rapid take-up of
m-payments.Despite consumers' fears, markets are preparing, if
slowly, for widespread m-payment systems.
Juniper research predicts that consumers will spend more than
£150bn by 2013 via mobile devices for goods such as e-tickets,
books and DVDs. This offers both mobile operators and service
providers a potential new income stream, and current economic
trends may even hasten its introduction.
M-commerce in Europe
Last month mobile network operator O2 announced its pilot scheme
to trial near-field communication (NFC) technology (the key
technology to enabling m-payments). Its partners are Barclaycard,
Nokia and TranSys, the consortium behind the current
Oyster card system.
Said to be Europe's largest trial of NFC technology on a mobile
phone, the study ran from November 2007 to May 2008. O2 gave 500
Londoners NFC-enabled handsets, each loaded with £200,
to use in place of Oyster cards on London Transport and in
participating stores including Books Etc, EAT and Threshers.
At the end of the trial, nine out of ten participants said they
were happy with the technology and 78% said they would be
interested in using contactless services if available. Exciting
news for mobile phone manufacturers was that 87% of subjects said
having an Oyster payment service on their mobile would influence
their next handset choice. Similarly, 47% said having phones that
allowed them to make m-payments at retail outlets would influence
their choice of phone.
Mobile network and financial services firms are beginning to
realise the huge untapped potential of this market. They are
starting to look seriously for ways to co-operate to develop
simple, secure and interoperable m-payment systems. The
Mobile Payment Forum, a global cross-industry alliance, was
launched in 2001 to address the technology challenges. But are
consumers as ready for it?
Consumers in Europe are unconvinced, TNS has found. In the UK,
only one in five would now consider using their mobile phone to pay
for purchases, compared with 46% in Vietnam and Korea. In
continental Europe, interest is even lower, with only 13% of people
in Germany and 9% in Spain willing to test the technology.
Several m-payment options are now on test:
• Cashless one-touch, where shoppers swipe their handset against
an in-store reader, appeals to a quarter of Brits and is the most
popular m-payment method.
• Barcodes for phones that link back to customers' bank accounts
have also been wellreceived.
• Text messaging, which asks shoppers to send a text to
authorise payment, and web transfers, where consumers use their
mobiles to go online and confirm payments while shopping, don't
rank highly. This may be because they are seen to compromise the
ease and speed of use of m-payments.
Barriers to adoption
The technical applications themselves aren't really the issue.
Trials and tests are under way worldwide Visa has plans to develop
applications for Google's Android handsets and groups such as the
Mobile Payment Forum ensure that technology issues remain at the
top of the agenda.
What worries UK consumers is security. They believe the
established payment infrastructure in Europe and current payment
methods are relatively safe. As a result Brits and Europeans trail
consumers in the developing world in adopting m-payments.
Having all their banking information on a single device that is
easily lost or stolen makes most people edgy. Around two-thirds
(64%) believe that m-payment would make mobiles more attractive to
thieves. Some 58% say that they would fear losing their phone,
which they equate to losing all their bank cards at once. Although
UK consumers are growing used to having lots of applications on one
device (thanks to smartphones such as iPhones, Blackberries, etc),
they prefer to keep their financial information separate - and
safe.
The future of m-payment
It is clear that the supply side operators will have to address
consumer confidence urgently. Marketers and advertisers should look
to South Korea and Japan. There banks, handset makers and retailers
have worked together to deliver a sales proposition based largely
on their own faith in these technologies.
In the UK, where security concerns and scepticism are rampant,
the introduction of m-payment technologies should focus on building
trust. This could be done incrementally. A first step would be to
introduce customers to mobile banking before introducing them to
pre-paid small purchases. This worked in the O2 trial. It lets
suppliers hammer home the point that mobile transactions are as
secure as more traditional methods of payment. Clearly, once
consumers start using m-payments, much of their fear will
disappear.