Monday, December 12, 2011
Jennifer Windh, Payments Risk Analyst at the Atlanta Fed, conducted the interview. She began the discussion by asking Evans about the viability of Isis, the mobile payment venture created by AT&T Mobility LLC, T-Mobile USA Inc. and Verizon Wireless. Evans was not enthused about Isis' prospects.
"The source of my skepticism is, I think, that the likely role of the carriers in payments is basically being a pipe," Evans said. "It's not clear that they really have any relevant skills needed for running mobile payments, and I think that it's more likely that they're going to turn out to be a very important source of pipes for other people developing mobile payments alternatives."
Evans pointed out that attempts by mobile carriers around the world to enter the payments arena have not succeeded. "Just the desire to make money doesn't mean that they're going to achieve that," he said.
When Windh asked why the United States has been slow to adopt mobile payments, Evans said major barriers to said adoption exist in the United States. The first "is that there is not a very persuasive mobile payments alternative for consumers to use at the point of sale," he said.
He added that another barrier is most merchants haven't acquired the technology needed to process mobile payments. "A very small number of merchants have NFC [near field communication] at the point of sale and have little motivation to adopt it," he said. "Bar code may work for some of them, [but] there isn't a lot of technology at the physical point of sale for mobile payments to work."
According to Evans, consumer demand will pique merchant interest in adopting mobile technology. "I think a fundamental problem at the moment is no one has really come up with a great way to use the mobile phone at the point of sale that is really compelling for consumers," he said, noting that this a barrier to adoption for both merchants and consumers.
He mentioned another significant barrier to mobile payment adoption: creating something better than the current system which, from merchant and consumer points of view, works just fine. The way U.S. consumers use their credit cards now is efficient, convenient and works really well, Evans noted.
"In order to persuade consumers or merchants to do something different, someone's going to have to come up with a really great alternative that adds value to the merchant and adds value to the consumers to make both of them want to do something different than they are currently doing," he said.
Mobile payments are taking hold in other world markets, but Evans doesn't foresee the reasons for adoption in less developed countries applying here.
"I think that where we are going to see mobile payments take off around the world is primarily in countries that do not already have a very well-developed payment card industry with acceptance at the point of sale and that have very well-developed mobile phone systems," Evans said. "So the places to look at in terms of important geographies are places like India, where mobile payment is sort of the obvious thing for the Indians to do. I think in other places it's going to develop much more slowly for the same reasons we are encountering in the U.S."
Evans believes payment technologies eventually will sort themselves out in the United States. The result will be a standardized mobile payment system – whether that system is based on NFC technology, bar codes or some technology that hasn't been introduced yet.
"I think in order for mobile payments to really take off, there's probably going to need to be a particular kind of technology that consumers become used to using and that merchants become used to accepting," he said. "So, I do think that there will be a winning technology. I think that it is very difficult at this point to predict what that winning technology is going to be."
While NFC is a leading contender in the mobile payments sphere, Evans feels it is too early to declare NFC the winner. "I think anyone who is confident NFC is going to be the winner is deluding themselves," he said.
Evans predicted the company that develops a "killer solution" consumers and merchants want to use will take the prize. "I think it's really the solution that is going to drive the adoption of a particular acceptance technology at the point of sale rather than the acceptance technology driving the solution," he said. He added it could be a decade before the champion in the mobile payment competition emerges.
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