The world has already turned mobile and money and payments are getting there, but the question is, how soon and in what way will cash go mobile? 2012 was supposed to be the boom year for mobile payments of all sorts.
But it wasn't, at least not for the most hyped standard, NFC.
There were many wildly optimistic expectations for NFC, and it didn’t deliver. Not that it didn't see some breakthroughs, it's just that it was far too little. There are several reasons why it is still underperforming, but two are crucial. NFC is complicated and costly to deploy, and it's still having some difficulties in persuading consumers to adopt it.
NFC requires reluctant cooperation between operators, retailers, financial institutions and handset makers, often with conflicting interests, slowing down the adoption. At the same time, cash and cards already work very well, and consumers are not too receptive to a new and untested technology. Many have said that NFC appears to be solving an inexistent problem.
But NFC is not the only m-pay technology – direct mobile billing and mobile money (think M-Pesa) are common across the globe and very popular with mobile users. Their success shows that a cashless, mobile financial ecosystem is viable and feasible, but above all that it needs ease of use and obvious, tangible benefits for both consumers and merchants.
When it comes to DMB, or carrier billing, charging purchases to your mobile account is fast, convenient and works on all mobile phones. Granted, it is limited to certain buys, such as digital and virtual goods, or ticketing and parking, but then again, so is NFC limited to POS purchases.
Highly popular in Europe and Asia, DMB has seen increased adoption in 2012, with heavyweights the likes of Google, Facebook and RIM enabling or extending DMB functionalities in their app stores. The beauty of DMB is that it's hassle-free and comes to consumers naturally, while for merchants, it extends their reach and gives access to a wider range of customers.
Adding the DMB functionality provided by Infobip’s Centili platform, specialised for in-app and online purchases of digital and virtual goods such as game upgrades, enables gaming developers to offer an immediate and familiar payment method, especially suitable for users without credit cards, such as teenagers.
M-Pesa and its sibling services across Africa and Asia elegantly and efficiently solve a problem so alien to the developed world – lack of access to banks and other financial services. It gives unbanked users a full financial ecosystem, while merchants, agents and mobile operators extend their reach and offer additional services with a guaranteed return.
So far NFC has to prove that it is convenient, useful, simple to use, and finally – necessary to an average user. It has the backing of heavyweights who have a lot of riding on this and it’s likely that sooner rather than later, NFC will gain significant traction. DMB and mobile money on the other hand are established methods, with proven track records and a wide range of applications.
One thing is sure for 2013: the entire m-payments segment will continue to grow, it’s bound to. The future is cashless; just remember how Will Smith pays for his bar tab in I, Robot. What was once a futuristic movie gimmick is now reality and it will only get better.