Payments are becoming secondary to marketing in mobile wallets, experts say. They contend that the emphasis is shifting toward using smartphones to deliver consumer-facing digital coupons, loyalty points or targeted promotions.

“Payments are a small sliver of the innovations in contactless and digital services,” says Mario Shiliashki, MasterCard group head for e-commerce product development. “The missing piece is what’s beyond the payment.”

The acquiring industry has been focusing so squarely on payments for 40-plus years that it hasn’t been thinking about what accompanies the payments, Shiliashki maintains.

And other observers agree.

“The key message is that mobile payments is a misnomer,” says Richard Oglesby, senior analyst and mobile payments expert with Boston-based Aite Group. “This is all about mobile marketing, which drives sales, and payment is a key component of the sale.”

The payments industry as a whole is not prepared for mobile commerce, making it easier for the third-party entrants to establish themselves in the business, Oglesby says.

“The payments industry is moving, but not nearly as fast as the startups,” he says.

More than 200 retailers responding to a National Retail Federation survey this year explained their reluctance to plunge into mobile payments, says Dan Butler, federation vice president of retail operations.

“They believe mobile commerce is the future, but they don’t want to spend money on technology, and then seven months later that technology changes,” Butler told attendees at a recent mobile payment summit. “They are deathly afraid of this.”

Given that trepidation, retailers consider it unwise to commit to a new payments and marketing method potentially driven by ever-changing mobile phone technology.

Instead, strategy for mobile commerce developers and retailers alike should rest squarely on the partnerships they form, says Aidoo Osei, senior manager of product strategy for Firethorn Mobile Inc., which launched a successful virtual loyalty card with Burger King restaurants in Utah.

“Mobile payments is like a roller coaster hype cycle,” Osei tells ISO&Agent Weekly. “You need a sustainable business model and need to identify correct partnerships and then let those drive your solutions.”

Mobile commerce represents “an expanding universe of opportunities to enhance the shopping experience,” Osei says. “We are just now scratching the surface of it.”

Companies such as Google, PayPal and Square, and joint ventures such as Isis, seem to scratch at that surface harder than others.

That’s because those companies have access to similar data about what retailers may spend on mobile initiatives. The card brands keep issuers and mobile commerce developers alike well informed of such matters.

U.S. retailers spent $220 million on mobile payment initiatives in their 2011 budgets, which represents only 0.15% of total advertising budget, according to MasterCard Inc.

However, 60% of those retailers said mobile was an important part of their future strategic initiatives, MasterCard’s Shiliashki told attendees at a mobile commerce meeting.

And a MasterCard forecast suggests that consumers appear ready for mobile commerce – to the tune of $43 billion in mobile coupon redemption globally by 2016.

Consumers will catch on quickly, if the payments industry focuses on the aspects of mobile payment that make life easier, says Joanna Lambert, American Express senior vice president of strategy.

“The key driver for consumers will be to save time by making things ‘on the go’ easier to do,” Lambert says.

Consumers will surely embrace mobile salary deposit, remote check deposit, and person-to-person payments, Lambert contends.

But for now, swiping a card at a point-of-sale terminal remains easier for consumers than adopting mobile-payment technology, she says.

The same arguments for enhancing mobile commerce for consumers have been bantered about for a few years now, says industry analyst Todd Ablowitz, president of Centennial, Colo.-based Double Diamond Group LLC.

“But more and more people and companies are recognizing it now,” Ablowitz says. “What will really be interesting is which company or companies can be the first to leverage this in the real world at scale.”

The simple strategy is to keep the consumer in mind at all times, he says.

“Consumers want a simple, compelling, high-value experience, period,” Ablowitz says.

Consumers don’t understand or care about the details of payment processing, he says. “When the market has to move consumers along to new technologies there must be a value proposition to them.”


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