Obstacles to Implementation of Mobile Payment
The unexpected attraction to mobile payments increasingly appears to be the catalyst to finally moving away from the magnetic card payments to a payment system that is more fitting to current digital economies. Despite the new, exciting technology introduced in the mobile payment market, there are still questions regarding whether mobile payments are necessary and worth the change. At least four important challenges for the implementation of mobile payment services with the breadth of impact are addressed as follows:
1. System Interdependency
Mobile payments represent a complex business model with several players, whose success ...view middle of the document...
Each entity wants to lead in the mobile payments ecosystem and have dominant role in the value chain. As a result, the market has remained stillborn.
2. Interoperability between all participants
The lack of standardization has been one of the principal challenges to slow down the development of mobile payments. Different forms of mobile payments from contactless and mobile card readers to mobile wallets and payment apps actually slow down the development process together with conflicting agendas of different players involved, including financial institutions, mobile network carriers, merchants and handset manufacturers. The unique quality of each of the technologies is the main reason that mobile payments have not yet been widely adopted by users and merchants. Merchants are not able to support multiple device options and users are not willing to use different device options/ mobile operating systems. The lack of interoperability is, therefore, preventing mobile payment adoption and making the required scalability unachievable.
If electronic payment services are to be adopted more broadly, cards or mobile phones must be usable not only with their own systems or mobile networks but also with other systems not covered by the “parent” system. Interoperability, which is the ability to make a payment from any bank, on any mobile phone, using any carrier, is very important for the success of mobile payments. The only way to extend mobile payment business across all the markets is to ensure that the mobile payment experience can be delivered across multiple mobile devices, manufacturers and cellular phone carriers to accommodate the personal preferences of the consumer.
3. Slow market adoption for contactless mobile payments
Main reasons for the slow market adoption for contactless mobile payments are as follows: (i) no incentive for consumers to use contactless mobile payments as compared to other payment modes; (ii) difficulty for consumers to figure out which merchants accept this mobile payment format; and (iii) no promotional/ educational support by financial institutions or banks for the new payment approach that they will be safer with contactless.
In order to speed up the adoption of this new technology, it is necessary to prove to all stakeholders that the new payment system would prove faster at checkout, cleaner to handle and therefore a good alternative to cash payments at the counter. The only payment options available so far are signature-based credit and/or debit, replacing cash transactions that typically cost less than 5 cents to process with a signature-card transaction that costs $.15 to $.75 or more. This has not created any incentive to get merchant support. Additionally, merchants prefer equipment that looks the same and does not require retraining staff. Mobile stakeholders must work harder to identify a compelling need for merchants to accept contactless payments.
4. Security of...