We have been talking about the imminent ascendancy of the smartphone into a payment instrument for the last 5 years… we’ve probably been seriously expecting it to happen over the last 3-odd years… and anyone that was at the Barcelona GSMA congress this year, will have experienced the exhaustion that everyone has with NFC – those who are tired of waiting have been forging ahead with incredible implementations ahead of those that are still talking about it.
Next week I am attending 2 conferences to interact with and experience the other side of the payments equation… the retailer.
As practitioners immersed in payments, we have always assumed that when the mobile toting consumer arrives at the checkout counter he will always whip out his smartphone, fiddle with a few buttons (to get it into a state to make a payment), and either tap it against or bring it into close proximity to some reader; flash the screen at somebody or something so that some barcode can be read; and maybe even simply return the handset to their pocket or purse, having authorised the remote payment.
Almost all of the mobile payment scenarios being envisaged imagine some kind of card (or pseudo card) emulation… Yes, so when it comes to the checkout counter, the smartphone dumbs itself down to the level of a good old fashioned card… and for many retailers, this is where the high costs of PCI, EMV, etc. come in – whether the transaction is emulating a real card or some kind of pseudo card (e.g. many closed loop QR Code based solutions still adopt the same 4 party or 3 party payment model as traditional card systems).
We cannot continue to beat the mobile payments drum while ignoring the real and legitimate anxiety being expressed by retailers. The smartphone toting consumer offers many exciting opportunities for the retail industry… such as the ability to start communicating with the consumer before the enter the store, continuously while they are in the store and periodically after the leave the store – retailers understand how merchandising, discounting and reward programs influence consumer behaviour… and they are just as eager to leverage the digital opportunities that the smartphone presents. Things just tend to fall apart at the checkout counter, when the smartphone toting consumer collides with a modern cash register.