Pondering the Future of Mobile Payments

The accelerated adoption of smartphones and tablets over the past year has raised hopes for mobile-payment solutions. Juniper Research predicts that mobile-payment transactions could reach $670 billion by 2015, triple the $240 billion projected for 2011.

Trevor Dryer (pictured), Intuit’s group product manager for mobile payment and point-of-sale technology, is spearheading solutions for service professionals who are always mobile (such as electricians and taxi drivers) and for small retailers who seek to get closer to their customers.

The GoPayment Blog recently spoke with Dryer about how small businesses can benefit from mobile payments and why the tipping point is coming fast.

GoPayment: What excites you most about mobile payments?

Dryer: Two things. One is the ability for people to be able to take credit cards and other forms of payment cheaply and easily, especially businesses that couldn’t take them either because they were mobile businesses or because they were bricks-and-mortar businesses that found it too expensive and clunky and complicated. Mobile payments really have revolutionized this space, making it easy, cheap, and ubiquitous. Everybody can take credit cards now, which is really a huge benefit. The other thing that excites me is that it really gives small businesses the ability to connect more deeply with end consumers.

Where do you think mobile payments will have the most positive impact?

GoPayment really started out targeting field trades — electricians, plumbers, and people who had no good way of taking a credit card. I still think that group, as well as mobile businesses like food trucks or farmers markets, is where the impact has been most profound. But now only 17 percent of our customers are field trades and the rest are retailers or service providers with bricks-and-mortar places, so we are seeing the impact spread.

How important is near-field communication technology?

I think there’s a big debate going on about the mobile wallet and what that will look like and how people are going to pay in the future without using pieces of plastic that have been around since the ’70s. NFC could take off, but there are some hurdles you have to overcome. First, there is a hardware hurdle from the small-business standpoint, in that the small business needs to have a reader and you need to have NFC chips in phones (and consumers with those phones). But there are big upsides to NFC. Depending on the privacy settings, geolocation lets you know that a specific person walked into your store, reminds you of their purchasing preferences, and can show them something that they might like.

How secure is mobile-payment technology?

GoPayment and most of our competitors have hardware-level encryption for mobile payments. What that means is when you swipe the credit card, the actual card-reader device is taking that information and encrypting it before it even gets into the phone and then it is encrypted again before it is sent for authorization. Many point-of-sale terminals don’t offer this. I think mobile payments are more secure than a lot of POS systems. Plus, if NFC takes off, it is a very secure technology. We haven’t seen much fraud at all.

What will be the tipping point for mobile payments, or have we reached it already?

I don’t think we’re there yet. We estimate that category awareness among small businesses is only 10 percent. It is pretty low, especially outside of tech hot spots. I think it’s coming very shortly, though. Mobile payments started with businesses that used to be unable to take payments. Now we’re seeing it move up. Businesses that used to have a credit card terminal are switching to mobile payments because it’s cheaper and convenient and provides other benefits.

What do you think will be the most common “form” of mobile payments?

I think the swiper is a temporary thing. It’s a nice bridge technology. People are used to paying by credit card, and if you try to leap right to another technology, you have a bit of a chicken-and-egg problem with not enough consumers using it or small businesses accepting it. But the card reader and the swiper will not be where we end up. I think that we’ll end up at a place where the wallet goes away and we can simply pay using our phone. Personally, I think it will be something based on geolocation and payment credentials stored in the cloud. I think we will not get there in a year or two, but probably in five years it will be quite common to pay with your phone.

Why has mobile commerce been slow to take off in the United States?

The thing that will get U.S. consumers over the hump with mobile payments is when you start providing benefits other than simply the ability to leave your wallet at home. If you start being able to do things like tie payments into loyalty programs, really target offers that are relevant, or tie into financial-management systems — things that Intuit is really well-positioned to do — those types of tie-ins will get people over the hump.

Is this something for everyone?

I think mobile payments are for everybody. If you are a small business that is not accepting credit cards, you are losing out on sales. If you are not taking cards, this is a really easy way to do it. If you are taking cards, there are good reasons to switch. One, it will be cheaper than the solution you have, and two, it sets you up with the hardware and the software to allow your small business to start a loyalty program, to make offers that benefit customers. There really is no reason not to switch.

About Heather Clancy

Heather Clancy is an award-winning journalist with a passion for transformative technology, small business and green business issues. Her articles have appeared in AllBusiness.com, Entrepreneur, Fortune Small Business, The International Herald Tribune and The New York Times. Heather is a regular contributor to CBSi, Forbes & GreenBusiness.com.
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