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.

Safe and secure for success

This week we've see a proliferation of mobile commerce and retail stories, showing just how prevalent mobile now is in the retail sector. Indeed, there are high hopes that most people will be shopping on mobile within two years – quadruple what it is today – and that within 10 years half of us will be social shopping (which must come as a relief to all the schmucks who bought into Facebook shares without the inside track).

This interaction – with the ultimate end goal of people actually spending money – is the holy grail of all the vertical market industries that touch telemedia services and, as revealed repeatedly at Connected Summit 2012 earlier this month, m-retail and m-commerce (and its increasing adoption) is what is going to propel all these services along.

In many ways the debate about apps verses m-web is, as a result, dead. It is about the service, the interaction potential and the way you monetize it that is increasingly becoming the driver to get mobile consumers consuming.

Over the past two years what telemedia really means is now e-commerce, usually on mobile or mobile devices, and how to create interaction and then how to monetize it. Billing and payments are key to this, but they are just part of the puzzle.

Interestingly, this move is simultaneously being driven by both consumer-facing industries and the consumers that they face. Consumers are already seeing the value in interaction. Second screening is rife and online and mobile purchasing is nothing new. The people want to engage and, if what you have on offer is worth it, they will also pay.

Businesses – especially retailers, TV programme makers, broadcaster and media companies – are also starting to understand that, empowered by their smartphones, consumers want stuff to buy. And operators know it and, finally, are starting to get some decent on-bill payment tools together to enable it (and to take a slice of this potentially enormous pie).

But there is a growing problem with malware. While many people have shied away from both e- and m-commerce as they fear for the security of their bank accounts, personal data and identity, there is a real and growing problem with mobile malware that scams people.

Mostly confined to Android – but, iOS users, don’t get complacent – these malware scams are starting to rip people off with fake apps that unleash all manner of charges. Its like the bad old days of PRS all over again! Only this time its dodgy programmers who are behind the scams.

Many have been stamped on, but still they come. This week PPP brought one such scam to book, but the struggle to stay on top of this will only grow tougher. And while PPP must be applauded for having the vision to look out for these things and take action, once they start to reach a critical mass, the scams and malware will kill m-commerce dead in the water.

This is a sobering thought and given the proliferation of online viruses one that really needs to be tackled ASAP. But are operating systems and the processing power of portable devices up to the task of running firewalls and malware detection? Many PC users have given up on such things as they are so slow due to the processing power now needed to run them. What hope a phone?

While the industry gets more excited about features and functions, network speed and billing tools, no one is really tackling the malware issue. It may not be a problem today, but could become a huge one – one that could kill the m-commerce business.

Digital engagement on the rise, but user experience and payments still an issue

The launch last week at the CONNECTED SUMMIT in London of Payforit4 can be seen as the beginnings of the UK network operators starting to get mobile commerce. The Connected Summit demonstrated that media, TV, radio, retail and live events are all crying out for simple, small value mobile payments to generate revenue from interaction and engagement.

But there is still the issue of payouts. Undoubtedly, Payforit4 marks the start of much better – and lets face it more realistic – payouts, but to many in the media industry, the retail sector and other areas of entertainment who are increasingly becoming mobile centric, payouts are the single biggest stumbling block to using mobile payments to buy things.

And while all this rumbles on, other payment tools – preloaded services such as iTunes, mobile operator wallets, mobile offerings from card companies and banks, as well as third party payment tools are already starting to gain ground. They may not be consumers most convenient choice, but they work.

Of course, with the likes of iTunes, pay outs are as bad as the bad days of PRS, with Apple routinely taking 30%. But that will change. Also, PayPal, card companies, banks and mobile operator wallets offer payouts comparable to credit card companies, and so merchants, hungry for some sort of mobile payment mechanism, are starting to adopt.

Ed Boddington, in his opening keynote on day one stressed that already PayPal accounts for 64% of online micropayments while PRS, once the doyen of this space, is down to 20%.

Where does this leave Payforit4? Well, it certainly now looks better and has some backing from operators – though it still seems unclear as to how much they are actually going to push it marketing wise: with Voda and O2 rolling out stored value wallets one would think they have something of a conflict of interest or at the very least the prospect of a confusing marketing campaign if they do push PFI4.

Much of this was addressed in the seminars and workshops at Connected, but in the main streams of the conference, with input from media companies and service providers, it remains clear that they are not convinced.

With 65% of digitally active consumers using mobile, the connected media space offers huge potential to media companies and telemedia providers, but consumers are being let down by poor connectivity, badly designed user interfaces and a consuming payments landscape.

These were the key headlines from the CONNECTED SUMMIT in London on 15 and 16 March, as the media, marketing, retail and live events industries gathered to look at how to monetize the growing trend for digital interaction with brands and entertainment.

According to opening keynote speaker Darren Mark Noyce, founder of consumer and brand analysis company SKOPOS, the digitally active are increasingly becoming the general population and that this is driving interaction.

“News on the move: provides a number of needs,” he explained. ”Mobile and digital satisfies a range of human needs: its on the go, a quick fix, an enhancement, a substitute and provides catch up. Similarly at live events and sports, mobile is an enhancement –  a second screen when on tv or at the game – and a replacement when you can't watch it live or on tv, or both.”

In particular, mobile voice apps are doing well. “There has been a leap in interest in voice apps from 29 to 38% in our research,” Noyce says. “The Siri ads on TV have helped – despite reality not really living up to what is shown – but it shows potential and consumers actually accept it now. The industry isn’t having to push technology on to them.”

Within the media industries, digital interaction – particularly around TV shows – is again gaining ground as users start to adopt it through second screening and just simple familiarity. And some better press about doing it. As the second keynote speaker, Ed Boddington from Harvest Media and Chairman of industry body AIME, told delegates at CONNECTED: “TV voting is converging and we have managed to make it work and get over the scandals of the past. Now have a very strong industry. Revenues are increasing – slowly.”

As Bod points out, shows such as The voice and Britain’s Got Talent are now doing voice short codes that make mobile voting transparently priced. “This,” says Bod, “will bring more users and customers into the mix”.

According to Bod, there will be a lot more live play along apps as well as SMS votes coming back too. “But,” he says, “the greatest challenge is dealing with volume and with volume spikes. “

Social media is also playing a role, explains Bod, and is starting to skew the market, especially when it comes to payments and revenue generation.. “American Idol in the US offers free Facebook voting and here in the UK, Five’s Big Brother uses Facebook credits for votes,” he says. “Interestingly, about 10% of votes for the show came this way.”

In Puerto Rico, he expounds, they used Facebook credits to pay for votes. “Average votes per unique viewer was 30 (as opposed to 1.5 for non-Facebook voters and operator payouts were 25% higher – and it was a huge success,” says Bod. “So online voting has a huge role to play and revenue to generate.”

But while digital usage is on the rise among the population, there are issues, warns Noyce. “There are issues, both technical and experiential. Mobile is still, the worst customer experience of anything digital, but if you can make it a portable shortcut to what people want and is advantageous to use then its great. If it just cuts corners, it's a poor experience.”

But payments and poor UI aside, CONNECTED demonstrated that the power of mobile and media together is awesome (indeed it was described by Rich Holdsworth of Wapple as “F**KING HUGE” on an acid pink slide early on day one). Tapping into this huge market is well worth the candle. Increasingly, thanks to second screening – especially on tablets – consumers are interacting with TV shows and marketing, In the high street, shoppers are also increasingly looking at how to engage with retailers and brands. The potential here is phenomenal.

But again and again it is shown that mobile is viewed as being costly and bad payouts reinforce this for both consumers and merchants. And it is a shame as there is a definite hunger for mobile interaction with these things and a definite thirst amongst media, marketing and retail to use it. All we need is for – to coin a phrase from the early 90s – to get the ducks singing from the same hymn sheet, and this can be a really lucrative market for both telemedia and the media industries. Let’s hope that Connected Summit 2013 will be able to demonstrate some real progress on all these points.

FOR MORE DETAILS ON WHAT HAPPENED AT CONNECTED SUMMIT 2012, SEE THE NEXT ISSUE OF TELEMEDIA MONTH OUT ON 31 MAY.

Europe gets Connected

News that the European Commission is making operators cut data charges for roamers to make the use of maps, email, social networks and other data-based services on mobile can only come as welcome news. As we gear up for the Connected Summit taking place next Tuesday and Wednesday in London, the fact that consumers and business users can now start to really use mobile anywhere will be a boon to the industry.

Connected is bringing together some of the most innovative companies in the telemedia space to show case the technology available to make interaction with media, marketing, retailers and brands an immersive and, well, connected experience.

With a line up including Microsoft, Fremantle, ShortList, Harvest Media, Never.no, O2, EverythingEverywhere, Vodafone, blippar, MindShare and Wapple (among others), the Summits show how mobile, tablets, the web and telemedia are all coming together to deliver interaction between brands and consumers that can be monetized, directly and indirectly.

These services – ranging from simple premium rate voting services right through to 3D augmented reality – offer to take the user experience around media and entertainment, marketing and retail into a whole new realm. While second screening is all the rage with TV, the concept doesn't end there. Increasingly, consumers are using their mobiles and tablets to create new experiences around whatever they are doing.

Social media sort of paved the way for this, but the tie up between it and the portable device has really made it one of the key phenomena of the early 21^st Century and set in train a revolution in how we all enjoy everything from the daily newspaper, to magazines, to TV shows. It also plays a role outside the home too, where increasingly the mobile aware generation are looking to enhance and augment what they do with their mobile.

On a recent trip to LA, I was amazed at how many QR codes I saw in everything. How cabs all take some form of mobile payment and how my hotel communicated with me via my mobile rather than shoving the bill under my door or on my TV screen.

My biggest gripe while in the city of angels was that I couldn’t use my mobile for fear of the punitive costs associated with doing so abroad. My operator tells me who much I’ve spend and stops be getting bill shock (thanks for that), but still the limit means I can do nothing of use with my phone. I felt like I had lost a limb. I was abroad and, while LA is not quite a strange city to me, I needed it for maps and email on the move. It would have been nice to use AR and QR codes too, but I simply didn’t have deep enough pockets.

So, while the EU’s move will not have an impact on my US travels (yet), it will make life a lot more connected when people go to Europe. And that in itself opens up vast new business opportunities. It also makes the mobile web – which is fast becoming THE web – something that is truly international, which is always what it was meant to be.

Learn more about making connected technology work for you at CONNECTED SUMMIT 2012. Sign up here