Mobile payments – not what consumers are looking for?

Good to see mobile payments make it on to the national TV, although as the BBC's technology correspondent Rory Cellan-Jones take on it nearly made me choke on my cornflakes. Reacting to the O2 Wallet launch a month ago (on the ball the Beeb science team), he downloaded it - along with Barclay's Bank's PingIt and Starbucks' loyalty app and set forth to spend a day not using cash. He failed.

And while he was forthright in saying it was all just hype and that mobile payments were nowhere near where operators would have us believe, he did concede that it was coming.

The interesting thing about this was the viewer feedback to the story. Most hated the idea of using their mobile to store money and pay, claiming that if they lost the phone they were double-stuck having no money and phone.

So what does this mean? Well, keep up the good work everyone, it will come, but it shows just how far off true mobile payments actually are. The tools are starting to appear now, but getting people to use them is going to be mighty hard. Even if Apple does build NFC into this summer's iPhone 5.

Cellan-Jones did mention at the very end of his report the fact that he hadn't mentioned NFC. Rightly he sees this as not a done deal in how mobile payments will work, and I agree. But what he failed to look into was the how on-bill payments are starting to be used. Following the launch this month at the Connected Summit of payforit4 and the news this week that Cross Country Trains are using it in earnest, I think it remiss - though not wholly unexpected - that this wasn't even touched on. OK so I won't be paying for my groceries with Pfi4, but nor can I with O2's wallet (the setting up of, on a phone, is fiendishly confusing: three different passwords to create and remember).

This is backed up by the latest findings from Gartner, which, while concluding that worldwide value of mobile payment transactions would increase 62%, from $105.9 billion in 2011 to $171.5 billion this year, did face problems.

Until bank accounts, payment cards and phones are all tied together securely with buy in of handset makers, operators, banks, merchants and the consumer, this sort of mobile payment environment isn't going to work. Right now it's good for digital purchase, works ok for small value ones where the infrastructure to actually use it exists, but that's about it.

Will someone like Apple or Google, PayPal or Amazon crack it first then things will change dramatically, but even they need the merchant and consumer buy in and, if the BBC's report - which talked to real people out there, not mobileheads and geeks - then the isn't even that much appetite for actually doing it.

Will this change as it becomes more prevalent and early adopters start to flash it about the place? I think it may actually be unlikely. Banks want to get rid of cash as it costs them money (ironically) to handle and distribute it, but even now it has taken decades to get people using debit cards and still most people prefer to use good hard cash.

The role of mobile payments, I believe, is in on phone/on device purchases, not perhaps wafting it about with NFC to pay for your supermarket shopping or a pack of ciggies or a pint. While I would love to stand outside a crowded pub and buy my round simply by clicking an app which ordered it, paid for it and saw it brought to me, I don't see it happening any time soon.

Hwan Chung, CEO of Danal CS&F sums it up nicely. “The past six months have seen a plethora of mobile payments and mobile banking services brought to market,” he says. “Operators, banks and technology providers are all investing heavily in this channel to open up new revenue streams but there is still a distinct lag in end-user adoption. Part of the problem is that the options being offered to consumers at the moment are too limited.

“Operators are asking end users to set up mobile wallets so that the CSP can leverage their existing relationships,” he continues. “This begs the question of why consumers should be asked to set up yet another account when they already have an established relationship with the end user via billing? Over the next few years I think we’ll see that the most successful mobile payment services are those that not only strike a careful balance between ease of use and security, but make life a lot simpler for the consumer. After all, at its heart, mobile payment should be primarily about convenience.”

Where Telemedia does come into this is in the role it can play in allowing for simple in app or on device payments. That is what mobile payments really is going to be about for the next five years at least.