SAN FRANCISCO–Even at a conference called the Mobile Banking and Commerce Summit, mobile payments can be a hard sell to some in attendance.
Many emerging payment systems never fully emerged. Names like Beenz, Flooz, Pay by Touch and even Debitman failed to edge out mainstream payments with systems for electronic, biometric and decoupled debit transactions. As for contactless cards, they never went away, but they never truly threatened the magnetic stripe either.
Attendees at the summit, hosted by PaymentsSource publisher SourceMedia, asked tough questions of mobile-payments proponents: is a digital wallet really that different from a decoupled debit card? Why would consumers make a contactless payment from a phone when they still don't care that much about doing it with a card?
Facing such questions, the defenders quickly conceded one point:
"Success here realizes we're not in the payments business. Payments already works," Michael Niczyporuk, head of strategy for mobile and emerging channels at Capital One Financial Corp., said in a panel discussion June 11.
Beyond enabling payments, mobile phones provide precise details on the time and place of each transaction, potentially providing to brick-and-mortar retailers the sort of data that online retailers get when they examine consumers' mouse clicks.
Cap One is one of the few banks to sign on to Isis, the mobile payments venture backed by AT&T, Verizon Wireless and T-Mobile (
And Isis, too, had something to concede.
The value of a mobile wallet is in the data-driven offer and coupon systems that allow consumers to save money, and "Isis does not directly deliver any of that value," said panelist Jim Stapleton, Isis chief sales officer.
"At Isis, we're very much a platform provider for the banks. … We're providing technology that allows merchants to [deliver value] for their consumers; that allows banks to do that for their consumers."
On its surface, a mobile wallet seems a lot like a contactless card, particularly because many of the discussions around mobile payments involve Near Field Communication chips.
But by itself, the "contactless card was a relatively thin value proposition, relative to a mobile wallet," Stapleton said.
The mobile wallet actually is boosted by a poor economy, he argued. The various offer systems being built around mobile data appeal to households that suffered during the recession. "The economy is not so good, and people … feel obligated to save," Stapleton said. "The emotion that comes out is: I have let my family down if I leave money on the table."
In a separate panel discussion, SCVNGR described its LevelUp mobile-payment system, which makes its money on attracting new customers and increasing loyalty. It does not charge transaction fees.
At least one person in the audience saw similarities to the LevelUp system and decoupled debit, which was pitched to merchants as a money-saver because it handled payments over the cheaper automated clearinghouse system.
If part of LevelUp's sales pitch is that it cuts costs for payments, then couldn't one describe LevelUp as a decoupled debit system?
"You could describe us that way," said Chris Mahl, LevelUp chief revenue and strategy officer. But that would be ignoring the company's true product.
"They don't pay us a cent until they get a new customer, so it's pure performance-based," he said.
Even Apple Inc. seems to be more focused on the perks than the payments. On Monday, Apple announced its Passbook system, which stores loyalty cards and boarding passes in a mobile device but does not directly enable payments (
"There will be a lot of models out there," Niczyporuk said. "We'll see what consumers like."
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