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Startups and giants alike are vying to make mobile payments take off big time. This is the way the world wants to go.

But while many of the parts are in place, it has yet to happen. Our mobile devices are doing almost everything but payments. Yet we all know that this device can make payments a more efficient, seamless process.

So why isn’t everyone doing it?

The analogy I’ve been trying out is the adoption of electric cars. They should be the future — more efficient, better for the planet, quieter … there’s even a “cool” factor to them. Yet demand hasn’t caught up with the idea.

Could mobile payments learn from the electric-car Catch-22?

  • OEMs won’t put their eggs in that basket because of lack of customer demand.
  • Lack of demand is due to minimal infrastructure, e.g., electric filling stations, mechanics.

The shared issues between e-cars and smartphone payments boil down to cost of hardware (the phone, the car), infrastructure (networks and merchant acceptance, filling stations), but perhaps most importantly, the catalyst for changing human behavior. The old ways, whether credit cards or gas filling stations, are so ingrained that a better value proposition has to power the behavioral change.

Let’s look at hardware. In terms of affordability, with mobile payments, the “vehicle” or device itself has already achieved mass-market pricing and saturation. Billions of people, even in developing economies, have cellphones, while the cost of e-car “hardware” is still out of the reach of most car buyers.

Now let’s look at service infrastructure. In the early days of cellphones, you couldn’t go so far out from home base, due to lack of cell-tower coverage. Here’s the second analogy with electric cars. In either case, if the infrastructure only allows you to get 100 miles out, what good is it? More service infrastructure means more users, and ultimately more business.

Here, mobile payments infrastructure is now ahead of e-cars — many pieces are in place, with such retailers as American Eagle, Toys “R” Us, Foot Locker and Macy’s accepting Google Wallet via NFC readers. But that hasn’t yet generated widespread usage.

When it comes to cars, the infrastructure that supports gasoline automobiles has been in place for more than 100 years, so both hardware and infrastructure present challenges to electric-car migration, the widespread switch requiring massive displacement of what already exists.

And between NFC and PayPal, for example, there are a number of mobile payments options already in place. Some require no hardware infrastructure, per se — there are software-based solutions gaining traction that integrate straight into the point of sale. However, enormous uncertainty about what will prevail prevents many merchants from making the commitment to invest in software upgrades and staff training.

The multiplicity of payment options flooding the market does nothing to help clear these murky waters. Many apps are only usable at one retailer or one coffee chain — and customers want one that works everywhere, rather than individual apps that each service only one facet of their lives.

Let’s look at the sweep of credit card adoption for a moment. Going from direct, cash-only payment straight to credit cards was a tough one, but a huge factor was universality of acceptance — the equivalent of being able to “charge up” your e-car anywhere. But there was a time when you had separate cards for Bloomingdale’s, Saks and Mobil, only usable at those merchants. Bank-issued credit and debit cards bridged that divide. And when it comes to mobile payments, what will really move the needle is mass acceptance, the ability to use your phone, with one app, everywhere.

Trust in the security and usability of the infrastructure is important, as well, but ultimately it comes down to the quality of the experience itself that will drive consumers toward mobile payments — and for merchants to put a stake in the ground and begin wide acceptance. Take the seamlessness of boarding passes on mobile phones — it’s an amazing experience for travelers who got so used to being held up at every point in the process. They can now bypass the kiosk or check-in counter and head straight to the gate.

It isn’t simply a matter of mobile payments replacing the card. The mobile payments experience has to offer more: It has to solve a problem like waiting for the check, skipping a line or splitting the bill in a restaurant. Factors like these, coupled with built-in loyalty and rewards so that separate loyalty cards become obsolete, will also play into behavior modification.

There’s more chance that mobile payments will catch on if the phone is used for every part of the process — from researching nearby restaurants, redeeming special offers, calculating how to split a bill and adding a tip, to making the payment, getting a receipt and collecting loyalty points.

Unlike the electric car, these issues are slowly being overcome in the mobile payment space. As merchant acceptance increases, mobile payments should happen without overcomplexity. This kind of one-stop simplicity could turn the tide of public trust in seeing the possibility of moving out of the leather wallet and into a mobile wallet.

Last week, I drove a Tesla, and it brought home the experience I’m describing. Tesla is doing to cars what the iPhone did to Nokia — it’s changing the game. No longer just a car experience, it’s an e-car experience in every detail — from the way you insert the key into the ignition, to handling and acceleration, to the way the lights turn off — that makes you wonder why you’d want to drive anything else. It can be the same with mobile payments — that “Wow!” factor that will itself drive the desire to use it.

Tal Zvi Nathanel is the co-founder and U.S. CEO of MyCheck, a checkout app that integrates smartphone capabilities with POS terminals, turning the payment process into a memorable experience. MyCheck is the largest mobile payments company in Israel, and is currently rolling out into the U.S. and U.K. markets. Reach him @MyCheckUS.



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