Traditional payment methods--credit and debit cards and cash--have well-established infrastructures and risk models attached to them. If you want your transaction to be quick (and in some cases hard to trace), you pay in cash. Even though you're paying with what is essentially worthless paper, the paper gets its value from the Federal Reserve and the strength of the U.S. economy.
If you're buying something online and are worried about fraud, then you pay with a credit card. If anything goes wrong, the credit card provider steps in, and assuming you reported the problem in a timely fashion, you're only liable for $50.
"If the payment mechanism, mobile- or Web-funded, such as a pre-paid gift card, accepts any of the major credit cards, the same protections exist for the consumer," says Dan Dufault, executive vice president, Sales and Marketing at Merchant Warehouse, a provider of credit card processing and mobile payment solutions.
What if the m-payment, though, shows up on a cellular phone bill instead of a credit card bill? Dufault, for one, doesn't believe this will happen. "[Ultimately], the charges will appear on the credit card associated with that account and, as such, the same credit card protections will apply."
Dufault's point of view is probably the safe bet, but it's not a sure thing. Mcommerce doesn't necessarily have to evolve so that traditional card networks are in the middle of everything.
"Competing initiatives and objectives between emerging payment players (such as Google, Square and PayPal) and traditional constituents (banks, card networks and merchants) has slowed down advancement of mobile transactions," Signorini says. "Much posturing and saber-rattling is occurring, since much is at stake financially for all of these different market players."
According to Signorini, it's not just obvious players, like carriers, who could infringe on the turf of banks and credit card companies, but also major online companies and retailers as well. "Large merchants, such as Wal-Mart, 7-Eleven, and Target, have formed their own initiative (Merchant Exchange), in an effort to at least influence how the market evolves and ensure that their market heft is recognized by these other players," Signorini says.
The other thing that Square, PayPal and Google Wallet could do is drive down the processing fees that merchants pay. But that doesn't mean they'll end up making any money doing so.
"The processing of payments is a loss for Google Wallet. The company has said that they are not interested in becoming a bank," Dufault said. "Rather, Wallet is a great conduit for information and provides Google with a way to better deliver their ads to consumers."
Which points to the main theme often heard in mcommerce cirlces: In order to succeed, mcommerce should focus not on transactions, per se, but on customer engagement.
The Secret Sauce of the Mobile Channel: EngagementTry this some afternoon. Walk in to a Best Buy store, scrutinize some high-ticket item, such as a gigantic flat-screen TV, and then see what the nearby sales associates do. Chances are their already surly attitudes will become more so.
Why? Because Best Buy--and, to be fair, many retailers--are worried about something they call "showrooming," or consumers using their stores as a showroom floors to investigate products and then walking right back out to find a better price online.
Personally, I find this to phenomena to stem more from paranoia than anything. I mean, if I'm going to buy online anyway, why on earth would I subject myself to the torture of entering a Big Box store? If I don't like what arrives in the mail, I'll ship it back (on Amazon's dime) and try again. If I do enter a Big Box store, the only way I can justify the psychic pain is by walking out with some gadget I must absolutely have right this minute.
According to Andrew Schrage, co-founder of Money Crashers, a personal finance Website, Amazon continues to outperform mcommerce (and most Big Box stores) partially because it has done a better job of engaging customers. Whereas most mcommerce retailers are overly focused on price and rely too much on display ads, which typically aren't very user-friendly, Amazon offers up recommendations specific to you.
"Setting an affordable price is not the sole factor to drive sales and increase revenues--providing a more streamlined experience for the consumer is equally important. Businesses that can do this will be the ones at the forefront to overtake Amazon and other Web-based retailers," Schrage says.
Now, I should pause here to point out that not every Big Box retailer is succumbing to showrooming fears. Lowe's, for instance, is bullish on mobile.
"Lowe's built its mobile success from the inside out," says ForeSee's Feinberg. "They started using mobile devices to help sales associates become more knowledgeable, and they then moved forward to use mobile apps to make their customers more knowledgeable too."
In other words, the mobile channel can serve as an extension of the physical location. Perhaps, people do research first on their mobile phone, or they do research in the store itself, but if you engage customers while they are on their mobile devices, instead of ignoring or discouraging them, they will indeed be your customers and not someone else's.
"[At Lowe's] when someone without a lot of home improvement experience walks into the store, they feel like they're on equal footing with the sales staff," Feinberg says. "This is why Best Buy will continue to fail. Instead of worrying about showrooming, they should worry about the customer experience."
