Reality 3: Mobile payments will become commonplace
Despite significant hype and promise, there are still a number of barriers to overcome before mobile payments can become a mainstream payment method in the UK. These include determining what customers actually want from mobile payments, and the technology and payment architecture to be used. Overcoming these barriers will require investment, but with continuing question marks over commercial models and how to apply them, building a clear investment case remains a challenge. The real value of mobile payments is likely to lie beyond core transaction processing in how value can be added to the wider consumption chain. In contrast to the experience so far, we believe the industry will need to adopt a more collaborative approach to address these challenges.
Our analysis reveals that there are broadly three possible scenarios for mobile payments: i) where incumbent players retain a dominant position, ii) where new entrants erode incumbent’s position, and iii) where new entrants are able to disintermediate incumbents entirely. While the risk posed by new entrants is often overblown, existing players should take seriously the rapidly developing innovations in this market and begin to take the lead in defining the future model.
