Mobile Payments' Killer App

The term “killer app” gets thrown around a lot, so here’s what I’m thinking it means when I use it: An app that drives a step function increase in the adoption of a technology.

Spreadsheets are the best example of a killer app that I know of.

It might be hard for many Gen Yers to imagine what the world was like before the Internet, let alone before PCs. But when PCs first arrived on the scene, their widespread adoption was not a slamdunk. After all, we had word processors for word processing (duh!) and mainframe and mini computers for geeky database stuff. But until PCs came along, people who had to work with a lot of numbers had to rely on an ancient device called a calculator.

Although calculators were pretty  good at making individual computations, people needed to make series of calculations and….you know all this already, don’t you?

And so the spreadsheet was born. And it was the spreadsheet that became the killer app that  led to the widespread adoption of PCs.

Roll the clock forward 30 years or so to 2010.

Payment alternatives have proliferated over the past decade. A new mobile payment technology seems to launch every day. Aite Group forecasts that mobile payments — which includes mobile bill payment, mobile P2P, mobile phone billing, mobile top-up, etc. — will reach US$214 billion by 2015.

In addition to the technology developments, regulatory changes are throwing wrenches in the payment stew. The Durbins of the world propose and create legislation that create uncertainty and diseconomies into the payments world.

What does this all add up to for consumers? Mass confusion.

What’s going to happen at the register or online  when we want to pay with one mechanism, but the retailer or merchant wants us to pay with another, and a third-party payments provider wants us to pay with a completely different alternative? Retailers and alternative payments provider will lure us with discounts and offers that align with their economic priorities, while  debit and credit card providers will dangle rewards and cash back in our faces. Which form of payment will consumers use?

We’ll probably use what we’ve always used. Millions of consumers make religious use of their credit cards to rack up points. And despite what you might have heard otherwise, debit card rewards programs will continue to proliferate, further cementing the use of debit cards among Gen Xers and especially Gen Yers (sorry retailers, but these folks — especially those at the younger end of the generation — don’t carry cash, and they don’t write checks).

It’s going to be confusing to figure out if the retailers’ and alternative payments providers’ offers are worth giving up our rewards and points.

What we’ll need is…..a calculator. A slightly more intelligent calculator than the one we used back in 1 B.C. (Before Computers), though.

The calculator I’m describing will evaluate the various payments for a particular transaction — and to be fair, we’re probably talking about a transaction whose dollar volume is in at least the three digit range (to the left of the decimal point, smart guy) — and recommend the best alternative for us, the consumers.

Who’s going to develop that calculator?

Actually, everyone, because technologically, we’re not talking rocket science. The problem is: Whose calculator will consumers choose to use?

All the payment providers will develop their own version of a calculator, and most likely — surprise, surprise — it will recommend their payment mechanism. (This will pose yet another test for financial institutions to prove whether or not they have their customers’ best interests at mind, or just their own bottom line — the true meaning of customer advocacy).

Riding in like white knights to save the day: PFM providers like Mintuit ( — I’m going to get a phone call for this, you know), Yodlee, Geezeo, Strands, etc.

Increasingly, these firms’ interests are becoming more aligned with the financial institutions’ interests as each month goes by, so it might be harder for them to truly represent consumers’ interests. But the best opportunity to access a full (or, at least, fuller) picture of a consumer’s financial picture in order to recommend a payment mechanism rests with the tools these firms provide.

After accessing their mobile device to use the payment mechanism calculator, consumers will find it convenient to simply complete the transaction using their mobile device. And help make the forecasts for mCommerce (a subset of the overall mobile payments landscape) a reality.

Mobile payments — not just mCommerce — will grow rapidly over the next few years in the U.S. I’m quite confident in Aite Group’s forecast, because I know how it was developed (and helped, in part, to develop it). It’s partially driven by the identification of a segment of consumers — we call them the Smartphonatics — who will be the early adopters.

Smartphonatics don’t need to be convinced to use their mobile device to make mobile payments. But later adopters (I’m not talking about the laggards) could use a prodding — and a mobile calculator that helps consumers make smarter payment mechanism decisions can be a killer app to accelerate the adoption of mobile payments.

5 thoughts on “Mobile Payments' Killer App

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  2. I believe the proliferation of mom-and-pop equivalent mpayments companies will at first help the industry because of all the attention, investment dollars and activity. But after the initial euphoria, the number of choices for merchants and consumers will cause what happens in most other markets – consolidation, competition and shuttering of the “me too” mpayments providers.

    So, the ride will be wild the next couple years. But you’re right on with your calculator question – who will aggregate and make sense of all the mobile data, along with the data resulting from debit/credit and other types of payments? (Maybe you?? 🙂 )

  3. Tom: I think you’re right on regarding the proliferation/consolidation of providers here. The mobile data question is another good point — could spell opportunities for some firms.

  4. Good points. The key is the balance between the regulator (there probably is going to be a government decree at some point if some payment supplier screws up big time) and the innovation that comes from ability to allow individuals to choose their direct clearing or payment service. Just recently we had an ‘earthquake’ here in BC. Prospera CU is offering the ability to use the Interac e-transfer system ( ) on a mobile device. This is huge. For years people have asked to be able to transfer money to anyone, anywhere as simply as possible. Now the first step has been taken to do this. Let your buddy pick up the tab because you can e-transfer him the amount you owe immediately. This opens up huge benefits to the consumer and at the same time shakes down some of the old age attitudes towards industry maintaining a major control of this function.
    PFM and it’s future derivatives will unmistakably be the next phase in transactions and management of people’s money. I say derivatives because PFM is still in its infancy. It will evolve. The problem will be the capacity of some in the industry to be able to do something. The doors are now open but what is behind them?

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