How far off is a future in which all the information in consumers' wallets can be contained in their cell phone? A future in which a radio frequency chip inside a cell phone can be used to touch a movie poster, buy electronic tickets, and then send one of those tickets' to another customer's cell phone?
Not as close as some futurists might like, but the panelists who participated in "The Future of Mobile Commerce" discussion at the 2005 Cyberposium conference held at Harvard Business School on January 29th are all contemplating new ways of enabling consumers to buy items directly through their mobile devices, particularly their mobile phones.
"Basically, the time for mobile commerce is now," said panel moderator Aaron McPherson, research manager, banking practice for Financial Insights. Customers are already purchasing personalized ring tones through their phone and are just beginning to be able to purchase videos.
"The first thing you've got to do is you've got to have more than just voice; you've got to have something to see on the phone," he said.
| What's going to take us beyond ring tones and games? |
| — Aaron McPherson, Financial Insights |
Some mobile phone customers can currently purchase a monthly subscription to a news service for their phone, for example. The next stage, McPherson said, will be the ability to purchase premium content—such as travel reports that can tell you what sort of traffic you're running into, then advise you on how to avoid it. The third stage, he said, will be when consumers can use their handsets at the retail point of sale to purchase things beyond what they can use on the phone itself: "The cell phone really becomes the general purpose identifier and (payment) information conduit," he said.
For Bob Wesley, CEO of Vayusa Inc., also known as MobileLime, the future is already here.
"We're in the last stage that (McPherson) talked about: We've taken all the credit cards in your wallet, and all your loyalty cards, and put them on your phone for when you go shopping at the store," Wesley said. He said the technology works on all handsets in the U.S., and the company has a salesforce that is out pitching the product to merchants to convince them to accept payments via customers' cell phones.
Lauri Pesonen, director of mobile payments for handset manufacturer Nokia Inc., said despite advances like those made by Wesley's company, the concept of mobile payments has far to go. "Mobile payments have been a great promise which has not so far materialized. There's been a lot of hype around it," he said.
Given the gap between relatively new approaches like Wesley's and the current state of affairs, McPherson asked, "What's going to take us beyond ring tones and games?"
Pesonen said the promoters of mobile payment services will need to find ways to convince consumers to reach for their phones instead of their plastic—and convince retailers it's worth the equipment investment to accept new forms of payment.
"The very central question is: What's the business case for merchants; what is the incentive for consumers to use the mobile phone for paying for something?" he said. It's far easier to make the case for the purchase of an item the customer "consumes" on the phone, such as the games or ring tones available now, he added.
Wesley, who worked in the credit card industry for many years prior to WireLime, agreed with Pesonen that payment behavior won't change just because the technology is available. "I've been in the payment industry for many, many years, and no one's going to change the way they pay unless there's some reason, there's some pain point that people are solving," he said.
But it's possible to make a case for enabling payments via mobile phone. Consumers may find it more convenient to carry their cell phone alone if it allows them to leave their wallet behind. And, Wesley said, cell phones have an advantage over the "smart cards" that have never really caught on for payment purposes; they can communicate payment or credit balance information, for example. But the promoters of mobile payment will have to take a page out of the credit card companies' books and learn a key truth about U.S. consumer behavior: Consumers love rewards programs.
"If you want someone to change their behavior and start doing something, if you reward them, they're going to do it," he said. When credit card companies started offering such incentives as airlines points, cash back or other rewards, Wesley said, "what happened was people started using those products more than cash."
