Aug 10, 2013 Dave King
Mobile payment technology has long been labeled as the next big thing in the transaction industry. The convenience of being able to simply tap a payment portal with a smartphone has excited many consumers.
In fact, in its recent report, "Mobile Wallets for the Masses," Yankee Group found that 70 percent of all consumers are interested in using mobile transaction services. Further, more than 75 percent of purchasers are particularly curious about what Near Field Communication (NFC) payment portals have to offer. However, the source noted that just 14 percent of respondents have used such technology in the past six months.
The source noted that despite the emergence of 10 apps that have recently been specifically designed to make mobile payments a reality, the technology has failed to catch on, even as many individuals call for such services.
The slow adoption rate isn't because of a lack of effort by the payment industry. Rather, it's more likely a result of poor incentives offered to consumers. Yankee Group suggested that mobile engagement should be more consumer focused, making it easy for buyers to enroll and stay active in rewards programs. Simply, the use of desktop coupon platforms does not fit into the increasingly mobile world that consumers find themselves in.
"As the market matures, solutions that deliver actual value for consumers and merchants will proliferate and clear winners and losers will become more apparent," said Jason Armitage, an analyst with Yankee Group.
Clearly there is a market for mobile payments. However, to date, vendors have been unable to attract enough users because they have failed to create services that make it worthwhile for them to ditch more traditional payment tools for smartphone and tablet apps.
Market still active
Despite the slow development, the industry is still seeing a significant amount of growth and activity among payment processing firms. For example, TechCruch recently reported that Venmo released a beta version of its mobile payment app that will now be compatible with Android and iOS 7.
Although it has been possible to use the service on other iOS products, the source reported that this is the first time in which Venmo will be available for Android consumers.
As more payment companies start to open up their services to new users, the use of mobile transactions may increase. However, vendors shouldn't lose sight of the fact that they must create user-friendly apps laden with incentives, as Yankee Group suggested.