When do mobile payments feel “right”?

POSTED BY Global Administrator
There’s always a lot of talk about the growing take-up of mobile payments, a trend which we in Juniper Research have summarised across the digital and physicals goods, mobile money and NFC sectors in our recently published report on Mobile Payments Strategies.  Aside from the business side, everyone agrees that the way in which consumers interact with a payments service is probably the single most important factor in the growth of that service.  Put simply, I won’t use a payments service, unless I feel comfortable with it – or it feels “right”. But what does “right” mean?  One of the obvious answers is “secure”, meaning I trust the service to faithfully execute the payment I authorise, but I want to raise another side of “right”, meaning it feels appropriate to the type of payment I am making.  To illustrate this idea, it’s worth looking at the growth of the digital and physical goods payment markets.  For digital goods, we currently see the market continuing to be larger than that of physical goods – and that despite stellar mobile efforts and achievements from retailers like eBay who reported a 300% increase in mobile revenue for 2010. Consumers are still reluctant to pay for purchases using their mobile phones, particularly for large amounts.  They will use their phones to look up comparison sites, but generally they won’t use them to pay for the item they decide on, reverting to their credit or debit card to pay in-store or online.  One aspect of this I think may be the different “rightnesses” we feel about paying for digital and physical goods.  Digital goods are usually delivered instantaneously and often to the very mobile phone we use to pay for them – it feels “right”. But what about buying physical goods, like a new fridge? Paying for a new fridge with your phone doesn’t feel so “right” – the fridge will be delivered to your home not your phone and there will also be some delay; it feels more risky, less “right”. Well, maybe that is set to change, not rapidly, but slowly as payment using NFC “wave and pay” starts to gain traction.  There are signs that paying for a small physical item like a coffee or a sandwich in a coffee shop by “waving” your phone at the payment terminal will eventually lead us to pay for a fridge in a superstore with the mobile wallet on our phone, rather than one of our plastic cards in our physical wallet.  I don’t think this will be simply because we trust the service more (although that is critical), it may also just be because it seems “right” to do something physical to get something physical …