Mobile payments continue to grow at a breakneck pace

This week, mobile payments certainly took a major step forwards. In New York, Google revealed its NFC mobile payment plans in the form of the “Google Wallet”, which enables consumers to ‘tap, pay and save’ using their mobile phones. In the UK, Orange and Barclaycard also launched ‘Quick Tap’, the country’s first contactless mobile payment service, allowing consumers to make purchases on the high street using their mobile phones.

These landmark announcements mark the beginning of an era where, in addition to using cash, contactless cards or chip and PIN, consumers can simply ‘wave and pay’ with their mobile phones in stores across the US and the UK to make purchases.

Indeed, there is no doubt that mobile is already seriously affecting consumer shopping behavior everywhere – and this announcement proves that the recent debate around mobile payments is finally coming to fruition. The good news is that there is certainly early demand for ‘mobile wallet’ services, as recent research found that a quarter of consumers would like to use their phones as opposed to cards or cash in-store, with cost saving and convenience cited as the biggest drivers for the shift.

However, before we can see widespread adoption, it is crucial that retailers use this as an opportunity to encourage customers to embrace new gadgets on the market before their competitors grab those influential early adopters. Education is also urgently needed, as we found that security was a key factor in consumer reluctance towards ‘wave and pay’ technologies – when in actual fact, NFC can provide significant security advantages over other forms of payment.

From a technology standpoint, it is also important for retailers to ensure that their investment in mobile strategies caters to developments such as Google Wallet and Quick Tap. Retailers must support whichever devices their customers have, which will only add to the chaos in the already fragmented mobile market.

For initiatives such as Quick Tap, retailers will need to ensure that they have an application across many different platforms including iPhone, Android, Symbian and so on if they are to support the different NFC transaction systems that are inevitably going to start cropping up, as seen with the Google Wallet.

With only 16 percent of retailers having a full mobile commerce strategy in place, the majority of retailers unfortunately need to rethink their strategies fast – particularly as those retailers that have developed a future-looking, comprehensive mobile strategy, will almost certainly be forerunners now that the mobile payments ball has actually started rolling.

Globally, mobile payments disrupt billions in expense and revenue for merchants, banks, and payments industry players. There’s so much at stake that we expect robust competition with the coexistence of many technologies in the near-to-mid term. In the end, this means there will be lots of payment technology choices and consumers will continue to use a wide variety of phones. Organizations need a way to support this chaos, and also must remember that NFC is but one technology that will be in play.

It’s undeniably a good first step in the mobile payments space. Even though it will initially have limited reach, starting in a few cities and focusing on a few retailers, it will no doubt continue to grow at a breakneck pace.

David Eads leads Product Marketing for Kony, the mobile commerce platform vendor. David is a mobile commerce veteran and was the founder of consulting firm Mobile Strategy Partners in 2009. As a blogger and frequent industry speaker, David has been interviewed about mobile for national media outlets like Mobile Commerce Daily, Marketplace on NPR, Inc Magazine, The Toronto Star, and The Christian Science Monitor. Additionally, David also has a decade of technical experience developing enterprise software systems in Java and other languages for UNIX, Windows, and other systems.