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Convenience is a barrier to electronic payments

Aug 02, 2013 Dave King

Convenience is a barrier to electronic payments

In some ways, the smartphone has left many other devices redundant. They function as phones, music players, date books and miniature computers. Although there are some limitations inherent to the technology - size most prominently - there are still a number of other technologies they could render obsolete.

One of the most prominent services that smartphones seem intent on eliminating is the credit card. Google Wallet may not yet be a viable form of alternative credit for some, but it is not the only method for electronic payments that developers are trying to implement in smartphones. The New York Times recently reported on the various mobile wallet companies that have formed in the past few years, such as Visa's payWave and Despite the popularity of smartphones and the concerted efforts of major companies to create a mobile payment method, nearly no organization has successfully instituted such a system.

The main issue with the process is one of convenience and infrastructure, according to The New York Times. Unlike credit cards, paying with a smartphone often involves multiple swipes and taps on the screen to work. A low battery, malfunctioning app or weak WiFi signal can also interfere with completing a purchase.

This hasn't stopped companies like PayPal and Groupon from trying to find an answer to these problems. The amount of consumer credit data that can be mined from the point of purchase can be considerable. One of the few organizations with a successful electronic payment system, Starbucks, receives consumer data every time a customer purchases coffee with its app, Fast Company recently noted.

A notable success

Based on Starbucks' last financial report, mobile payments also account for more than 10 percent of all its consumers' purchases.

Why has Starbucks succeeded where so many other businesses have failed? The New York Times pointed out that Starbucks invested a good deal of time and money into making app purchases as quick and convenient as possible. Its app works reliably and the stores contain kiosks specifically devoted to mobile purchases.

Unlike Starbucks, other companies cannot trust that the electronic payment systems they build for mobile phones will still be supported in the near future. Google Wallet, and the various other mobile payment apps represent a fractured landscape of mobile payments. Starbucks simply has to build a kiosk that functions with its app; other businesses have to create them for multiple competing apps or invest in company-specific apps with as much care as Starbucks.