Not Even Apple Pay Will Quickly Solve "Mobile Payments" Problems

Some of us have argued that it could well take a decade or more before mobile payments become a routine part of the consumer experience when paying for merchandise at a retail location. And even then, “routine” use might be a reality for only about half of all consumers.


After 20 years, the percentage of U.S. households using automatic bill paying is still only about 50 percent. Likewise, after 20 years, use of debit cards by U.S. households is only about 50 percent.


It took about a decade for use of automated teller machines to reach usage by about half of U.S. households.


So history is the reason it is reasonable to predict that mobile payments will not be a mass market reality for some time.


Some might argue the problem is that big companies cannot innovate. Actually, that might be a problem, but is only a small part of the adoption process.


The bigger problem is that major changes in end user behavior have to happen, and before that can become a reality, it often is necessary to spend quite significant sums to create the infrastructure enabling the behavior change.


In the case of mobile payments, that involves creating a critical mass of devices, payment apps and processes, merchant terminals and retail brands. Beyond that, the developing market would have to come to a practical consensus about standards, interfaces and methods.


Also, with huge amounts of revenue at stake, it will take some time to sort through rival business interests and approaches that pit credit card issuers against retailers, for example.


All of that ensures a lengthy period of confusion before scale is possible. And until scale is possible, progress will be limited.

In consumer financial services, decades can pass before a significant percentage of consumers use an innovation. In fact, a decade to reach 10 percent or 20 percent adoption is not unusual, in the consumer financial services space.


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