Mobile payments are getting simpler but, in most cases, they still have a job to do to displace cash. As long as cash remains the favourite means of payment, businesses looking at opening up the mobile and card channels have to be sure that they are giving consumers clear reasons for purchasing via these means. However, it’s a rare month in payments where someone doesn’t predict the end of cash. Despite being a strong proponent of the benefits of newer payments methods, I don’t think we should be holding our breath. There’s a couple of reasons for this.
Second, old habits die hard, and this is especially true in payments. As a consumer product, payments has a fairly unique combination of being to a consumer simultaneously both risky and boring. This means that not only does a consumer need a good reason to use a new method, but also they aren’t that interested in considering the options (sad but true: the only people who are interested in payment methods, are people like us in the payment industry). So even when a different option might be better, they may well use an old one out of habit, or even flip between the two on a whim. I’ve got a Starbucks app, but I sometimes pay in cash – I just forget, or the cash comes to hand first.
And herein lies an important lesson for those of us involved in developing and promoting those new payment methods: success won’t come from replacing cash, so that it wasn’t what we should be trying to do. Success will come from offering consumers new benefits that can only come from the new method, whether that is personalisation, use of data, location specificity, or something else. Do that and the new payment methods won’t replace cash. They’ll simply displace it.
Dan Salmons is managing director, PayPoint Mobile and Online
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