According to a study from Gartner, worldwide mobile payment users will surpass 141.1 million in 2011, a 38.2 percent increase from 2010. But the research firm said mobile payments are not growing as fast as originally projected due to slower than expected uptake in developing countries.
The report noted that while consumers are increasingly embracing smartphones and the mobile, retail, and financial industries are all rushing to roll out near-field communication (NFC) to coax consumers to use e-wallets, implementation has been sluggish because service providers have yet to adapt their strategies to local requirements.
"In developed markets, companies are trumpeting the prospects of NFC without realizing the complexity of the service model," Sandy Shen, research director at Gartner, said in a statement. "We believe mass market adoption of NFC payments is at least four years away. The biggest hurdle is the need to change user behavior by convincing consumers to pay with mobile phones instead of cash and cards."
A comprehensive article last week in USA Today outlined four key hurdles toward adoption:
Changing consumer behavior: Shoppers are long-conditioned to using cash and credit cards. Omar Green, Intuit's director of strategic mobile initiatives, told USA Today, "There isn't anything harder or more expensive than changing people's behavior."
He added that consumers will likely need value-added services to make the switch, such as a smart wallet that helps find discounts or offer alerts on credit limits. Mr. Green said, "What I'm hearing isn't so much, 'Please give me a way to tap and go.' What I'm hearing is, 'Please help me better manage my money when I'm actually out there spending it.' "
Security and privacy: Losing an actual wallet promises to be more risky since mobile phones (and apps) can be password-protected. But Consumers Union senior attorney Michelle Jun believes that consumers will likely need the same level of protections that come with credit cards before they feel comfortable with mobile payments.
Privacy rights also need to be better explained. Google mobile-payments executive Osama Bedier, told USA Today, "The consumer has to be very aware of what data they may be making available, and they've got to give their consent in every case."
Infrastructure: Merchants have to be persuaded to send the time and money to upgrade checkout terminals. Alberto Jimenez, who leads IBM's mobile-banking and payments initiatives globally, said, "Merchants are not ready and the ecosystem is not coordinated."
Competing models: As banks, credit card issuers, wireless carriers and technology companies all vie to take the lead in delivering mobile payments, many different options are emerging. It's still not known if shoppers will carry multiple payment or wallet apps or just multiple cards within a digital wallet. The Gartner study noted that the slow adoption of e-wallet services may be a sign consumers are waiting for a cohesive system to emerge although some mobile experts quoted in the USA Today article believe the overall opportunities are still emerging and looming larger.
Dan Schulman, president of enterprise growth at American Express, told USA Today, "A lot of experimentation is happening. There's no silver bullet, no definite winner out there at this moment."
Which is the largest of the four hurdles mentioned in the USA Today article toward mass adoption of mobile payments?