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article image2014 is the year for mobile payment systems

By Drew Hendricks     Jul 25, 2014 in Technology
Summer has arrived and with it consumer spending has thawed, although not to the levels that e-tailers had hoped. Larger purchases — cars, furniture, and other durable goods — have decreased.
On the upside, consumer driven mobile payments continue to rise. Estimates are that only 3–7 percent of consumers use their phones to buy goods in stores. However, that number is growing — there were twice as many mobile payments in 2013 than in 2012, and more than a quarter of all consumers say that they are willing to try mobile payments. However, like online and mobile banking, consumers will not adopt the technology until they see a clear benefit to using it, and this remains the missing piece needed to trigger wider adoption of mobile payments.
“The technology is there, and the savings are real for banks, but until consumers see some of those savings, or some other benefit, it’s just not going to take off” states Tej Kohli, founder of Grafix Softech, one of the original innovators in online payments. “We’re hopeful for more, and have ramped up our infrastructure to prepare for it, but it hasn’t happened yet.”
However, there are real structural barriers preventing increased mobile payments. Technologies in the US are highly fragmented and both banks and retailers have been loathe to invest in more advanced point-of-sale technologies — one look no further than the failure of the US system to adopt the chip and pin system prevalent in Europe and Canada despite the system’s increased ability to prevent fraud.
However, there is a benefit for banks to invest in this are — early adopters like those expected to use mobile payments systems tend to be younger, more affluent, and more likely to have disposable income. Banks that invest in these technologies will have first access to these valued consumers. In addition, consumers will likely use mobile payments as an extension of their credit or debit cards, rather than as a substitute for cash. Therefore, mobile payment systems are likely to depend on the bank card system and card providers will have to adapt their networks to prepare for the increased traffic.
“We know that we will have to invest in backroom technologies, but we are ready to do that. Now all we have to do is get the customers to use it!” states Kohli.
More about Mobile, Technology, Payments, Payment Processing
 
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