Are we just the last to pick up on the mobile payments trend?
To make contactless payments the norm, we must make them a necessity. Contactless cities such as Tokyo and Seoul see consumers using contactless payments for transport and other daily needs. Mobile payments in the western world are still a revolution waiting to happen – it just hasn’t quite hit the UK and USA as much as we all expected. It’s obvious that with everyone carrying around increasingly advanced smart phones , we’ll be able to use them to pay for everything from our groceries to our drinks to our haircuts. This revolution was supposed to hit us already, but the predictions of this mobile payments revolution is yet to see the light of day. Juniper Research estimated that worldwide mobile payment volume would reach an incredible $240 billion by 2011. By 2015, Juniper predicts, worldwide mobile and point-of-service (POS) terminal payments will reach an even more incredible $670 billion. For the average consumer in the UK and USA, this is somewhat confusing. After all, how often are people using their phones for m-commerce in the real world? Not as often as reports have led us to believe.
Sure, a few retailers offer this service. McDonalds sometimes has NFC terminals, allowing consumers to pay with capable smartphones and debit cards. We know the technology is there, but for some reason we’re just not catching onto it as quickly as we should. The slow adoption seen in this development certainly isn’t due to a lack of investment, with many companies – big and small - pouring loads of money into this market, certain that their business will grow and prosper with this cutting-edge payment method. But, despite money and an inevitable move into mobile payments, no one is using this cutting-edge form of paying for everyday goods, right?
Wrong. As many know, Asian countries such as Japan and South Korea are well onto this trend. The African nation of Kenya has mobile technology years ahead of the UK and the US, not to mention a population eager to keep up to date with the latest innovations. The reason for Japan’s extreme success can be seen in the banding together of banks, transport authorities and councils. Public transport, public parking and other usual spending habits were joined onto the m-commerce bandwagon to cater to the entire ecosystem. This is a great example of product extension, which has seen Tokyo become the world-leading contactless city, and the people of Japan great adopters of the m-commerce technology. This is something the western world is yet to see. At the moment, consumers are left on their own to use the technology available, something that is not encouraging users to, well, use.
Now, even the Caribbean has one up on the US and Western Europe. News has hit of Haiti’s surprising adoption of these technologies in the past year. In reality, Haiti and cutting-edge technology is not necessarily a usual match. Due to ongoing economic woes and natural disasters in the past few years, Haiti is a struggling nation in many respects. According to Spanish website Movilian, mobile penetration is the lowest in the South American and Caribbean region, with only between 35 and 40% of a total population of 10 million inhabitants. Of these, between 85 and 90% aren’t banked. Granted, this is a small minority of people in Haiti able to make use of the technology, but the adoption rate of these users is exceptional. The speed with which the mobile wallet has reached the threshold of 10% penetration of the adult population is an indicator of high adoption of the service. The average age of the ecosystems that achieved this scale is four years, but in Haiti it happened in only one. The numbers are even more striking when considering the low penetration of mobile phones: mobile wallets reach 1 in 5 devices.
While Haiti is obviously a completely different market to the UK or US, the quick adoption rate of the new technology shows its power, and how it really is here to stay. Asia caught on years ago, Africa is well on the way, and now Latin American and the Caribbean are adopting this technology at a surprisingly fast rate. Cynics are already claiming mobile payments as the revolution that never happened, but the success rate in many differing countries (South Korea to Haiti) is a testament to this emerging payment method. While it is taking longer to hit our shores with the bang promised, this really is the inevitable way payments are going. The infrastructure, time and money has already been pounded into it in the UK and US, and we are just preparing for it to ascend into daily payments. If we work with public transport authorities and councils a la Japan, we can maybe increase the use of contactless payments. The slower-than-expected uptake of mobile payments doesn’t prove the system won’t work. If anything, it just be that people in the UK and US take just a little bit longer to adapt to new financial technologies than our Asian, African and Caribbean friends.