Mobile Payment Reprieve?
Movement may be stalled, but forces set to kick-start momentum, says LevelUp's Priebatsch
LAS VEGAS -- While speakers at a mobile payments conference earlier spoke of the death of mobile payments, other attendees spoke of convergences and trends that speak the opposite. At a morning session for attendees of the Financial Mobility Summit in Las Vegas, Seth Priebatsch, "chief ninja" and CEO of LevelUp, a mobile-payments provider based in Boston, began his welcoming address admitting that the advent of mobile payment has not arrived as soon as predicted.
"So why has this disruptive shift in payments has never materialized?", he asked the attendees as he showed two identical, mathematical formulas on a large screen. "It's because these two formulas--one for the American Express card and the other for Google wallet--are the same."
With both equations being the same, no reason to change exists, he said. "Change is expensive," he explained. "Credit cards work just fine. Change means merchants, payment processors, credit card companies would have to bring in new hardward, new training. And mobile payments aren't better. And on top of that you have entrenched players."
That said, he believed that several compelling reasons will keep the march to mobile payment going. These benefits include:
- Low payment processing. Mobile is a path to potentially lower processing fees, a concrete trend that could "disrupt rates" as people currently see them.
- Access to data. It becomes a platform for a merchant take back control over his customer base.
- Advertising and loyalty. As a larger vision, mobile payment is just a piece of a larger connection to a retailer's customers, creating a concrete pathway for advertising and the building of loyalty.
The reason why these benefits have not trickled down to retailers is that a larger convergence of multiple players has yet to occur--five groups to be exact. But Priebatsch said those five groups are now moving quicker to common ground for various reasons.
Here are the five groups he said require convergence:
- Consumers. Of all the groups, he said consumers are the easiest to understand if not to appease. They want to save money. But in order to get to that step, the mobile-payment solution must be simple, immediate, consistent, ongoing, meaningful and "invisible," or seamless. Getting to that point can be difficult for many providers and retailers.
- Merchants. Retailers need to both save money and make money. He said it's not enough to be able to save 2% on an interchange fee, retailers need to take in double-digit increases in sales in order to believe in the power of mobile payment.
- POS companies. The providers of the payment devices that already exist in a majority of retail locations need to be involved, as they are the "gatekeepers" to the transactions and the data tied to them.
- Acquirers. Too many relationships exist around the company that processes a retailer's transactions. Actively bringing them to the table is important.
- Developers. The folks who develop the products tied to the execution of mobile payment are needed to build the interfaces needed.
As an "ecosystem," Priebatsch said each of those groups are actively seeing the potential of moving toward common ground.
"We are focused on all five," he said. "Movement is starting."
Held in conjunction with the Prepaid Press conference, the Financial Mobility Summit attracted about 400 attendees, with approximately 60 exhibitors for its trade show.