From the January 8, 2009, issue of ISO&Agent Weekly.
Many ISOs are unaware of mobile-payments technology and the potential revenue opportunities associated with it because their merchant clients are not requesting information about it or preparing to accept mobile payments, according to observers. With mobile payments, consumers pay for purchases at the point of sale via contactless payment using mobile devices.
ISOs potentially can earn additional income from mobile payments by selling their merchant clients upgraded, contactless-enabled terminals or by selling mobile applications that complement mobile-payment technology, such as electronic coupons and rewards programs, observers say.
Interest in emerging technology trickles down, says Sam Caine, president of Card Payment Services Inc., a Frisco, Texas-based ISO and processor. If consumers do not embrace paying for purchases with their mobile devices, merchants will not buy contactless terminals to enable such payments, and agents likely will not sell it, he says.
"Until the consumer leaves the piece of plastic behind, it's not going to get off the ground," Caine says.
Many ISOs also are focused more on surviving during the difficult economy and not on expanding their product reach, he adds.
As some observers suggest, consumers will want to use mobile payments, but ISOs may find themselves trying to guess just when that will happen.
State Of Mobile Payments
Widespread use of mobile payments is not a question of if but when, says Nick Holland, senior analyst with Boston-based Aite Group LLC. "It's coming. It's not debatable at this point," says Holland.Predictions for when a national rollout will happen vary. Adoption estimates "are all built around how quickly mobile pilots turn into mobile deployments," says Randy Vanderhoof, executive director of the Princeton Junction, N.J.-based Smart Card Alliance.
Awele Ndili, CEO of MShift Inc., predicts mobile payments will become more common in two to three years. "It is going to be in synch with other applications, such as e-commerce and mobile banking. We're certainly going to see more mobile applications and a big uptake of mobile banking," says Ndili. San Jose, Calif.-based MShift is a provider of mobile services and applications.
A majority of consumers view the prospect of using mobile devices to pay for purchases at the point of sale "somewhat appealing" to "very appealing," suggest the results of a Monitise Americas LLC study. Eighty-four percent of survey respondents expressed interest in contactless mobile payments, with 46% finding the concept "very appealing" and 38% "somewhat appealing."
Among respondents ages 18 to 24, 88% view contactless mobile payments "somewhat appealing" to "very appealing," while 85% of those ages 25 to 44 and 84% of respondents ages 45 to 65 find it appealing.
"No one is debating [mobile payments] will happen. The driver is consumers," says Lisa Stanton, CEO of Providence, R.I.-based Monitise Americas, a provider of mobile-banking and mobile-payment services.
Preparing For Mobile Payments
ISOs should be prepared for mobile-payments technology when it does come of age, says Aite's Holland. "It makes a more compelling case to sell contactless POS terminals if you know that in not too many years there will be a demand for not just paying using phones but also for loyalty and couponing embedded in the phone," he says.
ISOs should be talking to their merchants now about upgrading their terminals so their clients are prepared to accept mobile payments, says Vanderhoof.
The upgrade cycle for point-of-sale terminals is slow, so ISOs should introduce mobile-payment information and potential terminal upgrades to their merchant clients sooner than later, Holland says. If ISOs begin preparing merchants now for future mobile-payments technology, "once the phone technology is available, [the merchants] are not caught off guard," he says.
ISOs also can begin exploring business partnerships with mobile-banking and mobile-payments product and service providers, says Ndili. By teaming with companies, "it is possible for ISOs to bring to market a range of products," Ndili says, adding that MShift has a partnership program available that enables third parties such as ISOs to offer mobile services.
Monitise Americas also uses resellers for distribution, states a company spokesperson, who adds that Monitise welcomes the opportunity to expand its list of reseller partners. "As it relates to ISO providers, we would engage them in selling our solution to those merchants with reloadable stored-value cards," says the spokesperson.