PART 1: • Handicapping PayPal in its Mobile Race with Google and Others

PART 2: • Handicapping Google in its Mobile Race with PayPal and Others

Over last two days, I handicapped PayPal and Google in their race with each other and potential players to grab a big share of the emerging mobile transaction platform ecosystem. Today, I’m going to share some final thoughts.

One thing that I think that the Starbucks mobile experience has shown us is how willing consumers are to adopt mobile payments solutions that only work in limited locations, like one store. The big question for all of the mobile payments solutions though is whether, how and for how long, consumers will tolerate a patchwork payments experience at the physical point of sale.

Yes, mobile phone penetration is to the point that just about everyone who wants a phone has one, which, of course, is an important step number one. But everyone also carries around their plastic cards now, too (and more so today than they do cash). What we don’t know yet is for how long the “belts and suspenders” approach to mobile payments (mobile wallets + cards just so you are covered) will be acceptable to consumers and what it will take for them to trade off lack of ubiquity for other goodies that will help drive mobile payments usage at the physical point of sale. We know that what drove Starbucks adoption (4 million users in less than three months) had nothing to do with making a payment transaction but rather solving for a problem that was more relevant to them and their customer: providing information on the available balance on their prepaid cards. Transacting was bolted to the ability of their customers to more easily manage prepaid card balances via the mobile phone.

It may come down to the fact that what drove adoption of plastic cards (speed and ubiquity) may not be as important, at least initially, in the mobile payments arena for either merchants or consumers (or the consumers standing behind the mobile payments user in-lane). It may be that mobile payments ignite first where they, in some sense, ignited last – local Main Street merchants that account for every day spend where consumers want a better way to interact with those merchants. It may also be that mobile payments ignite first in larger merchants where the notion of “store cards” becomes easier for consumers (since fat wallets in cyberspace is a non-issue) and more attractive for merchants who can see better economics from those propositions and offer different things to their customers. The future propositions for everyone pursuing the mobile payments vision seems to hinge on which of these forks in the road are pursued. And as always, the devil is in the details.  

For sure, it’s still too early to know any of this, because there are still many, many unknowns. But at least we’re getting closer to the day when we’ll all have the benefit of real consumer and merchant feedback on real solutions. That will make mobile payments arena a whole lot more interesting and tangible. Can’t wait!

Karen Webster is the CEO of Market Platform Dynamics (MPD), a consulting firm that helps companies find, implement and monetize innovation. She serves as an advisor and member of the board for a number of companies operating in the payment, technology and digital media industries. More info here.