As the payments industry works towards a cashless future, mobile technology providers, wireless distributors, and payment professionals gathered at the Prepaid Press Expo 2012 in Las Vegas this week to discuss how the mobile payments and financial services landscape is shaping up. Trying to paint an accurate picture of all the fragmented activity occurring around mobilizing payments appeared challenging at best. It’s a new frontier.
Two things were clear. First, as a flexible product capable of serving a large consumer base, prepaid offers one of the best payment options to help drive growth of mobile payments and financial services. Many speakers pointed to the massive increased adoption of general purpose reloadable cards (Money and Financial Services products by Mercator’s definition) as proof of the opportunity. The Money & Financial Services segment had $40.85 billion in load volume in 2010. This represents a 42.7 % increase from the $28.63 billion load in 2009. Next week, as part of its highly anticipated annual prepaid benchmark, Mercator will release new benchmark numbers, reporting the growth of all prepaid segments. Mercator strongly believes that increased application of Remote Deposit Capture will be a significant game changer for these products, directly challenging the check cashing business and alternative financial service providers.
Also clear in the discussions at this year’s expo was that a ubiquitous multi-wallet solution, delivering the right level of value adds (e.g. remote deposit capture, remittance, bill pay), security and data is needed for widespread merchant and consumer adoption of mobile payments and financial services to occur.
But beyond the technology aspect, there must also be the consideration of channel. Technology is shifting where and how consumers shop and who they trust to deliver financial services. With the battle for the future of a cashless society underway, successful program managers will need to determine what channels will be most relevant to consumers in five years and lock those channels up today.
Today’s technologies have introduced new communications channels that have a very different set of capabilities than all current communications channels. Smartphone apps can be made context sensitive based on a wide range of attributes, including but not limited to, location, movement, consumer data, or even activation of other applications. The process of identifying what features smartphone users will find compelling has only just begun, but it is clear that 2012 will be the year of the mobile app in prepaid.
This effort to discover compelling smartphone services takes on a sense of urgency as shown in Mercator Advisory Group research which indicates that consumers have a limited, albeit growing, capacity for the number of apps they will actively use. This suggests that there is a first mover advantage associated with the early introduction of compelling smartphone applications. This application of smartphone aware context to existing marketing, promotions, incentives, and payments solutions will shake the market (as has already been demonstrated by Starbucks – which is just the tip of the iceberg).