Financial sector unconvinced about mobile payments

By Elliott Holley

Senior executives from the financial sector are split over the extent to which mobile payment technology has failed to take off – and what they can do to fix it.

According to Niklas Bartelt, managing director at Germany’s DZ Bank, the jury is still out as to whether mobile payments are the next big thing.

“There are a lot of scenarios we are looking at. It could be the next debit card, but it could also be the next electronic purse (which failed),” he said at the International Payments Summit conference in London on Wednesday.

DZ Bank is currently partnering with Swedish payments company iZettle, which distributes cheap mini chip-card readers to small-scale merchants. The technology is part of a wave of products that aim to make payments easier, faster, and cheaper. Earlier this month, payments company Kalixa Group launched a set of tools including an mPOS, e-wallet and acceptance kit, which it said would disrupt the global payments market in Europe, the Americas, Asia Pacific and the Middle East.

However, while useful, Bartelt was unconvinced thatsuch schemes as iZettle and Kalixa would change the world. “Contactless technology has not borne fruit as much as some of us had hoped,” he said. “We need to watch customers and what their real problems are.”

These sentiments were echoed by David Birch, director at Consult Hyperion, who said that customers cannot currently purchase a phone that supports mobile payments in the UK – making the whole question of mobile payments irrelevant. Birch added that in a rational world, banks and mobile operators would work together to provide security – but that is not the case today.

“The world we live in has not the slightest shred of cooperation between banks and operators,” he said. “Look at Sixpack in the Netherlands, it didn’t work. That’s why NFC stickers are the future of mobile payments.”

Other participants argued that the debate on mobile payments risked misplacing where the advantage of the new technology actually lies. Instead of focusing on NFC or focusing on replacing more traditional forms of payment, advocates should focus on other ways of finding value, or else the new technology risks failure.

“There needs to be something more to a mobile wallet,” said Steve Ellis, EVP, group of wholesale services at Wells Fargo. “Do you have trouble using cash or debit cards? Nobody has a problem buying anything they want. What we need is to add value. The real promise of a mobile wallet is to create a one-to-one marketing relationship between the retailer and the consumer that is useful to both – that’s what’s valuable.”

According to Ellis, most mobile payments that take place in the US actually consist of users simply using their mobile to access a website and carry out a payment, rather than a proximity payment such as purchasing an item in a store. Echoing concerns voiced earlier by Eimear O’Connor, head of mobile payments product management at Barclays, Ellis called for the creation of new standards to make alternative payment types work effectively and to avoid unnecessary duplication.

“Do I have to go to all my different mobile wallet providers, or can someone aggregate it for me?” he said. “We need to work cooperatively and positively, not to keep people out, but to prevent painful compatibility issues coming up. Mobile payments are a great opportunity – they are much more valuable than cards in getting people away from cash.”