For many years, technologists, venture capitalists, journalists, and large companies have pined for the era when the mobile phone
would become our wallet. And yet, already five years into the smartphone
era, mobile payments are not mainstream.In a recent report, BI Intelligence lays out the four kinds of mobile payment solutions that currently matter, analyzes the two key problems that any mobile payment solution must solve to break into the mainstream, and maps out potential winners and losers in the mobile payments race.
Here are the four kinds of mobile payment solutions that currently matter:
- Carrier billing: Where the consumer pays by text message and the charge is added to their phone bill. This is great for a variety of specific use cases (reaching the unbanked, especially teenagers; ecommerce and gaming), but is crimped by carrier fees and control.
- Near-Field Communications (NFC): Where the consumer can pay at the point of sale by waving his phone in front of a terminal. NFC has been overhyped: it's not more convenient than cash or credit, and the many companies who want a piece of NFC are canceling each other's efforts out.
- Apps: Where the consumer uses an app on his smartphone to pay, typically by scanning a barcode at the register. This is especially useful for specific companies and retailers to offer, as it allows them to offer loyalty rewards and discounts on top of payments.
- Card readers: Pioneered by startup Square, with recent entries from eBay (PayPal), Intuit, and Verifone, these solutions allow merchants to take payments by plugging a card reader into a smartphone or tablet. They're very convenient (swiping a credit card is already ingrained consumer behavior) and piggyback on the existing credit card network. Card reader companies can offer value-added services on top of the payments experience to spur adoption by merchants and consumers.
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