How Companies Can Get in on the Mobile Payments Game
To understand the future of mobile payments, you must understand the history of mobile phones.
For a long time, mobile phone manufacturers and providers worked towards a singular goal: making it possible for anyone to make a phone call anytime, from anywhere. And for good reason, as this was a valuable proposition to consumers for some time. People wanted to carry a phone in their pocket and make crystal clear calls, hence the long-lived “Can you hear me now?” campaign. But once this basic need was satisfied, technology had reached a point where new value could be added. It was time for an upgrade.
Smart phones began to emerge , and with them, expectations shifted. When the iPhone came out, its performance as a phone was originally panned. But the critics missed the point. A clear phone call was no longer the end goal. The industry changed direction, largely unbeknownst to many of the players. Some manufacturers, like Nokia, didn’t see, or downright ignored, the writing on the wall. Others, like Blackberry, couldn’t see the future of the smartphone outside of their siloed perspective. And as both examples demonstrate, working to improve functionality without also working to understand and meet new needs is a race to your own commoditization – a concept that service providers like AT&T are intimately familiar with.
At the core of this problem is the fact that companies are much better at identifying solutions than they are at identifying needs.
What does this mean for mobile payments? Banks, carriers, and device manufacturers see enormous potential in mobile payments, and are charging headlong into a war to own the transaction. Jumping into mobile payments now means going head-to-head with Google Wallet, Isis, and other established players and startups. The problem is that they’re all fighting for the wrong thing. The truth of this is evidenced by the simple fact that no one is begging for the newest and best mobile payments solution. Google Wallet adoption has been stagnant, and payment platforms from banks are little more than a way to wire money.
Why aren’t these products taking off and changing lives? Because in this country, no one has a problem giving their money to someone else. There are many ways to move money around, and many of them work very well. If you’ve had a problem paying for something at a store recently, chances are that it was a digital payment system, not your credit card, that was the problem.
So what should companies do?
1. Look at needs around money, not the transaction.
The problem with mobile payments is not one of technological development. Companies that want to get into mobile payments should be looking to find the needs that people and merchants have around money and how it fits into their lives rather than focusing on how to facilitate the transaction.
Money is hugely important for many reasons. It helps people feel in control. It helps them get involved in things they care about, or take care of their family. And none of these needs have anything to do with the point of sale.
Merchants have needs too. They need to be in control of their business. To see where their marketing efforts are effective, and where they should cut and run. Merchants want to know what brings people through the door, and what keeps them there rather than going online. They want to see where they’re doing well, and where they can improve. Any solution should focus first on solving the needs people have on both sides of the transaction.
2. Look to the extremes.
Smartphones didn’t take off because of call clarity. They grew because millions of users and app developers took the blank slate of the smartphone and ran with it, pushing the boundaries of what the device could be one app at a time.
Similarly, the initial exploration of how to approach payments needs to start wide, by talking to people living on extremes of digital and mobile behavior. Studying extreme behaviors gives a snapshot into what will be mainstream in the future. Talking to digital nomads (people who travel constantly and fund their lives by making all work digital, and location independent), and people who have socially funded their college education will tell you much more about how money fits into people’s lives than any survey of preferred features ever will.
3. Generate solutions with a hybrid approach.
A hybrid approach is necessary to find a path to the future. That means a blend of inspired intuition and creativity, and deep quantitative analysis. Surveys are great for validating existing theories, but will never help generate truly disruptive solutions. Needs analysis and extreme research will point the path forward, while quantitative testing will verify how strongly a held a set of needs is for a brand’s existing customer base. It is only through the combination of these approaches that players looking to tackle mobile payments will be able to create solutions that are both innovative and meaningful.
Let’s face it, right now, people may adopt Google Wallet or Isis, but nobody really cares. One solution is as good as another because all they do at their best right now is act like an inefficient and less-convenient credit card. The race to own the transaction is a race to the bottom. Of course, investment in technical solutions is necessary, but it is not a solution on its own.
Making a transaction work is not a product, it’s a tool that is only one part, albeit an essential part, of a product that brings meaning to the relationship between people, their money, and their lives. Ultimately, the winning company will keep this front and center in the development of their service and ecosystem.