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Easy Does It

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18 January 2010
An avid follower of the mobile banking/payments space, I've recently been struck by similarly-themed analogies about mobile payments, which are worth keeping in mind (especially by us industry analysts). To be more specific, for mobile payments to work anytime soon, they have to be easy. The first and perhaps most meaningful illustration of this point has been the phenomenon of text-based payments for the earthquake relief efforts in Haiti. As many of our readers are already aware, a $10 donation can be made to these efforts, very simply by texting (for example, texting "Haiti" to 90999). The $10 donation shows up as a charge on one's phone bill. Done, simple. Mobile Crunch aptly described this process as being as easy as "dropping a quarter into a slot" -- well put. The proof of the power of being easy is that by last Friday (Jan 15), $11 million in donations had been received via text donations alone. At $10 per transaction, that comes out to about 366,000 mobile payment transactions per day -- how else in the U.S. do you find so many mobile payments? Another argument for mobile payment simplicity, and a recognition that we aren't there yet, came from an unlikely source -- Fiserv, a major banking technology player with mobile offerings. In an on-line recording of a Q&A session, Calvin Grimes (Fiserv's mobile solutions manager) made the point that, "if use of your mobile device to pay for something is harder than pulling out a piece a plastic, consumers aren't going to adopt it". Calvin goes on to state that consumers will need some form of a value-add (e.g., mobile coupons, reward redemptions) to carry mobile payments forward. This makes total sense. The lesson from the Haitian experience is that consumers' ability to use existing form factors and interfaces makes mobile payments incredibly easy, with rapidly-spiking adoption as a result. Adoption of mobile payments approaches that require consumers to buy, learn and acclimate to new mobile devices, software and interfaces will obviously take much longer. Having said that, it will be interesting to see if the current wave of text-based donations ultimately serves as a "tipping point", ushering in consumers' awareness of mobile payments.

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