What Are the Problems with Mobile Payment?

Internet commerce has created a vast market for digital payment. With Near Field Communication (NFC) built into almost every smartphone, some of the major financial services companies in the world have created mobile payment platforms that they have advertised as being a fast and secure option for consumers who want to use their smartphones to make retail payments. While this technology has been around for a few years now, not many people utilize it frequently. Here are four reasons mobile payment hasn’t taken off.

Traditional Payment Types Work
Even in a society where the gold standard is more of a marketing ploy than anything else, cash is still extraordinarily useful. As a result, many people simply use methods of payment they’ve been using for decades. First Annapolis Consulting’s “Study of Mobile Banking & Payments” states that while 64 percent of all smartphone users have used some form of mobile payment platform, only a measly five percent consider themselves frequent mobile payment users. This shows that while it may work for the time that you forgot your wallet in the car, most of the time users will stick to what they know.

What Incentive Is There to Use Mobile Payment?
Mobile payment services have grown more sophisticated over the years, and some states have undergone a shift to a digital ID system. Your first thought might be that this completely eliminates the wallet, but how secure are these digital representations of formerly physical identifiers? The ID? The credit card? These constructs have worked for decades and you can see how users will need some form of incentive to move away from them.

Moreover, mobile payment services have, in the past, made it difficult for users to redeem their loyalty points with the use of a mobile point of sale machine. Take, for example, Starbucks, which uses loyalty points that are exchanged through a mobile payment platform. Their mobile application takes both the loyalty points and mobile payment and combines them into one easy way to earn back value as a customer. Just like the consumer, a company won’t want to invest in a solution if it’s not something that will produce a sense of long-term value.

Therefore, the best way to convince users that a mobile payment platform is the right way to go, is to ensure that they get some sort of value from it.

Mobile Payment Requires Considerable Effort
One of greatest benefits of mobile payment is that it’s a much easier method of payment than others. All you need to do is “tap and go.” However, it can still take more time than you think to open up a smartphone app and make a payment. In fact, it can take just as much time as it would to take out your card and make a normal payment. With a mobile payment system, you take your phone out, unlock it, access the mobile wallet app, and select which card you’re going to use. You then have to hold your phone to the terminal. Finally, you need to sign a receipt or a screen and provide a PIN. While it might offer an interesting alternative to traditional payment options, it’s still a pain, and you need to remain cognizant of this fact.

Mobile Payment Means Security Issues
As is the case with most digital systems, there is a considerable convenience at the cost of security, in most cases. It’s not an uncalled-for concern--in fact, countless people suffer from data breaches at banks, stores, and other major online retailers on a daily basis. Why would mobile payments be any different?

The cybersecurity industry has expressed a cautious optimism of payment applications. A 2015 Mobile Payment Security Study urges users to wait and see what the results of such applications are, but it does acknowledge that there has been considerable progress made in this sector. The security of mobile financial transactions has made leaps and bounds, including account tokenization, cryptograms, and multi-factor authentication--all to keep security at an all-time high for mobile transactions.

What will the future hold for mobile payments and transactions? Computerware can help you implement mobile solutions designed to augment your operations. To learn more, reach out to us at (703) 821-8200.