Small Business: Mobile Payments Big Money or High Risk?

Small Business: Mobile Payments Big Money or High Risk?
Author: Eric Everson – MyMobiSafe.com

Imagine a world where all of your financial transactions are conducted through your mobile phone. A place where anything from transferring funds to pay your electric bill to paying for your groceries is all conducted via the convenience of your mobile handset. Interestingly enough, this is a world that already has the framework and tools in place for mainstream use. So why aren’t more companies jumping on the mobile payments opportunity?

Mobile commerce is a developing niche that has not reached a tipping point for mass adoption throughout the world. There are pockets of users that have been quick to embrace this new technology, but for far too many others it just hasn’t taken hold yet. For those companies (large and small alike) that have invested in the future of mobile commerce (to include m-payments, m-banking, etc) there is a lot of money riding on the successful uptake of this new technology. With these investors impatiently awaiting the surge of social interest in this technology it is the risks this technology faces that become increasingly apparent.

From wallet phones to mobile payment applications, there is an entire host of mobile commerce options to choose from already. This market as “niche” as it may still be is seemingly becoming flooded with competitors. From the industry titans of the credit markets to the startup mobile application developers, the solutions becoming available are numerous. In such an environment the reality of acquisition costs per customer begins to set in. This became a critical issue for us at MyMobiSafe.com too as the average revenue per user numbers were easily imbalanced. Whether you are a major multinational or smaller vendor this business like so many others carries hefty customer acquisition costs. These costs typically mean that these vendors must meet X many users for Y amount of time to even begin to breakeven on these solutions… and this isn’t even considering the exorbitant infrastructure costs that these companies face to deliver/manage their mobile commerce solutions.

Pretending that we can ignore costs for a moment, there seems to be an even bigger risk here… which is at the consumer level. I am a graduate of the Harvard Business School – MIT Program, and I am well aware of the textbook innovative technology adoption cycles. With that said, are mobile commerce solutions filling a market need or creating a market novelty? Sure it would be convenient not to carry my heavy Harley-Davidson wallet, but with tap-and-go payment cards, no signature credit cards, a gamut of prepaid cards, online payment solutions, and more is the general population looking for yet another payment/commerce solution? Failure to identify a critical need to adopt mobile commerce solutions stands as the greatest potential hindrance this market faces. Do we need mobile commerce solutions the same way we needed online commerce solutions? With all handsets heading toward the standard of allowing real Internet connectivity, won’t many of these unique-to-mobile solutions become obsolete given a narrow timeline?

I won’t even touch on the major issues of handset-level security that these solutions face, but the underlying question remains… could there be more reward than risk in this market? With consumers increasingly willing to try new technologies, this represents a real potential opportunity for this niche to gain some traction. Perhaps only the long-sighted persuasion of the markets invisible hand will foretell, but for now there are a lot of businesses treading water hoping that you too will adopt a mobile commerce solution.

Your friend and mobile technologies guru,
Eric E: AKA “The MobileTech”

Eric Everson
MyMobiSafe.com

Eric Everson is a leading mobile technologies researcher and is the founder of MyMobiSafe.com. If you would like to contact Eric Everson for interview or with research related inquiries contact him directly at EricEverson@Hotmail.com.