ABA Banking Journal - September 2011 - (Page 34)
cover story | digital wallet
Mobile money at stake
where will banks fit when mobile payments become as common as debit cards?
By John Ginovsky
nderstanding exactly what “mobile payments” are, and figuring out how they fit in with your bank’s overall strategy, will be crucial as today’s smartphonetoting customers start looking for their banks’ payment apps. The basic danger is, if your bank doesn’t have an app, your customers will go find a bank—or something else—that does. Getting a fix on mobile payments has become all the more urgent since two financial services analysts— KPMG and Gartner—independently predicted that mobile payments will be “mainstream” among consumers within four years. Far fetched? Consider, as one industry observer points out, what Apple did to the music industry with iTunes. Plastic cards could go the way of music CDs. Smartphone is the new wallet When you mention “mobile payments,” you have to immediately define what you’re talking about. Mobile payments are sometimes mentioned in connection with
34 | ABA BANKING JOURNAL | september 2011
digital wallets, mobile wallets, or e-wallets. These generally refer to the same thing, analysts say; that is, the ability to conduct retail pointof-sale transactions through the use of a mobile device. Many observers point out that other forms of mobile payments have been around for a while, such as bill pay, remote deposit capture, online e-commerce, and person-to-person (P2P) systems. What’s different is the realization that as people find they can do more and more with their smartphones, one result will be increased pressure to be able to do retail POS payments, that is, to buy a cup of coffee, movie tickets, gum, or anything. These are the next mobile payments and the smartphone is the new wallet. The technological ability to do this is here, or rapidly approaching. A number of other factors still have to be sorted out—how to convince merchants to obtain the countertop readers; how to embed near-field communication (NFC) chips in handsets that can be read by all interchange systems; and how to convince consumers such payments are safe. Major challenges, to be sure. the google effect Perhaps the biggest question to be answered is who
If you would like to try to load the digital publication without using Flash Player detection, please click here.