Mobile payments has been hot for many years now but we have not seen the liftoff, why? The answer is that the first generation of mobile payments is based on technologies that are insecure, nonflexible, often dependant on operator or handset and with a poor user interface. These first generation solutions are generally based on USSD, SMS (text) or SIM-based and have made some success in the un- and underbanked world due to the reduced necessity of security, GUI and transaction speed in these regions.
To get real customer adoption things are needed on "both sides", meaning at the players in the payment eco system and at the consumer side using their mobiles to pay. Higher security is a must, especially when many more and higher value transactions (see for example problem with M-Pesa). So, below are a few basic upgrades and needs for mobile payment generation two.
1. Security. A must to get the big account holders like banks and other financial institutions to make the move. Use the already well defined and existing PKI (Public Key Infrastucture) as the basic for authentication and signing of transactions.
2. Usability. It must be easy and fast to perform a payment. A mobile application with a nice user interface is the way.
3. Flexibility. Todays solutions serves one or few payment situations. Solutions that serves all meaning POS (Point of Sale), person-to-person, online and man-to-machine (example vending machine) will win. They should also work on most handsets and of course support future new services.
4. Independency. Today solutions usually have dependencies like need of a new/special SIM card, or being MNO, network or subscription type dependant, or the need of special hardware or will only work on a selection of handsets. A generation two solution don't have these dependencies.
5. Cost. Todays solutions are quite expensive and this amazingly enough both at the merchant side (initial, monthly and transaction cost) and on the end user side (SMS, special SIM/hardware, etc.). Generation two has zero to none distribution and transaction cost that will give the possibility to set attractive pricing.
The technology to get a mobile payment service that combines these needs exists today. The end user side is already set though we want to use our mobiles to pay. The challenge is to get the payment eco system players to head on the same route.
Lars Aase, VP Marketing, Accumulate