One thing I've learned while covering the payments industry for almost seven years is that I can't be gullible when wearing my journalist hat.
I’ve heard it all, and then some, from companies that peddled their products to me as the next big thing to change payments. Most of those companies now are out of business, and probably because they were the only ones who bought into their own hype.
The situation this industry finds itself in today is that the hype machine is in overdrive, especially when it comes to mobile payments and wallet providers. And if you think that’s actually a good thing, then I’m afraid I have some bad news for you.
Sure, the hype machine results in more mobile payments consumer awareness that should spur more adoption. But the majority of the supposed key companies involved in mobile payments overhype their products and deliver underwhelming results. The companies, however, that do deliver what on the surface can be considered successful results often do not reveal key details about how they arrived at those numbers. I’m looking at you, Isis!
One of the biggest issues I have with current mobile payments hype is this unattainable utopia where you can leave your physical wallet at home and rely on your smartphone for everything. I can’t think of a bigger example of misleading consumer marketing.
When PayPal revamped its mobile wallet last year, the eBay-owned company tried to sell consumers on the flawed argument that they could leave their physical wallets at home. What PayPal, and others, have failed to admit publicly is merchant acceptance is still a problem worldwide.
I live in Salem, Mass. When I first opened the PayPal app after I moved here in April, I learned only two merchants accept PayPal. One of those merchants is Home Depot, which is where PayPal debuted at the physical point of sale.
And I’m not trying to pick on PayPal. Google Wallet, LevelUp, LoopPay (which really isn’t a true mobile wallet by my standards) and others all in some way promote this idea of leaving your physical wallet at home and a frictionless (another marketing buzzword) shopping experience at the physical point of sale. The bottom line right now is that we are far from this magical world that only exists in the minds of those executives who dream of such a scenario.
So, what can companies do to lower the volume a bit and stop misleading consumers?
First, be realistic, because your mobile wallet or mobile payments product is still limited in a lot of ways.
As I mentioned earlier, I can’t use every mobile wallet everywhere. And when you advertise a certain merchant that accepts your wallet, make sure they have the proper equipment at the point-of-sale terminal. I tried using Isis at two CVS locations, but couldn’t complete a transaction because the contactless terminals were not working.
Companies also can give a shot of realism to consumers and admit that yes, it’s probably still a good idea to carry your physical wallet because you still need a driver’s license, health insurance card and even a library card on your person.
Second, give me an incentive to use your wallet.
We know making a payment with a phone is not enough for consumers to begin to even entertain the idea of leaving their wallet at home. Industry analysts and executives drive home that point daily. But not everyone heeds this advice.
More companies should follow LevelUp's lead and focus more on loyalty. The company made the decision a long time ago to focus on loyalty instead of the actual payment, which is completed via a QR code. The more you use LevelUp at a participating merchant, the more that merchant rewards you down the line.
Isis also is doing loyalty well in some cases and currently has a great promotion. It revolves around the American Express prepaid card Serve and the $1 cashback deal on every eligible purchase through the end of the year. The wallet's biggest use case issue right now is that it is limited to a small number of bank cards, which stymies widespread adoption despite some attractive rewards.
And finally, companies need to better educate consumers and merchants about their products.
The cashiers at CVS had no clue about Isis when I tried to pay with my phone. That's a huge problem. I've also attempted to use mobile apps with an in-app payment feature at bars and restaurants where the staff was unaware of any type of partnership with the provider. That's another huge problem.
Facebook friends message me with all types of questions regarding every company I mentioned in this post. The most asked question? "Is it safe?" That’s yet another huge problem.
My three observations are just a small sampling of what I'm seeing today. I might not be the most qualified person to speak about the technical aspects of mobile payments. But when I wear my consumer and journalist hat to observe the industry, I see too many little things companies are not addressing and it's deafening.
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