Mobile Payment - types and tracking

Good article by Alistair Fairweather titled Four Very Different Mobile Payment Services  - there is more on the article than here and worth a read

This is his advantage and disadvantages and my added comments in colour

Approach one: Phones as credit card machines (Square)

Advantages

Ubiquity and familiarity of credit cards (at least in developed economies);

A clever and comfortingly familiar payment interface; and

The focus on small businesses and vendors has given them cheap and effective market penetration.

Disadvantages

Requires physical proximity between buyer and seller;

Requires a smart phone and special additional hardware (although it is free); and

Requires the buy-in of (historically unfriendly) banks and credit card companies (which may slow or limit international adoption).

All your lovely data is still not yours and make is easy for the status quo to remain, you can see some natural support from certain players who want to remain in power.

Approach two: phones as swipe cards (Google, Orange, Samsung, Barclays and many others)

Advantages

Incredibly simple and intuitive interface for users – just wave, beep and go;

Very quick and efficient for vendors of all kinds. No fiddling with change or waiting for credit card machines; and

Caters for “unmanned” purchases, such as vending machines.

Assumes that banking and payment separate

Disadvantages

Requires new technology at every payment point;

Very few handsets currently support it – although by 2014 that may have changed;

The old chicken-and-egg dilemma: merchants won’t adopt it until customers do, and vice versa;

If your phone is stolen, you’ve now also lost your credit card. Yikes.

Ah ah – you run out of battery….

All your lovely data is still not yours and could present certain strong players in an old sector with new powers to maintain dominance.

Assumes that banking and payment  

There is no escape

Approach three: SIM and/or USSD based mobile money transfers (M-Pesa)

Advantages

Lowest barriers to entry, since it works on more than 95 percent of handsets;

Low transaction costs; and

No bank account or credit card required.

Where there is nothing to compete with – probably unbeatable

Cannot be tracked (well you can but lets pretend)

Disadvantages

Tends to concentrate cash in some people’s hands and credit in others’, so physical cash transfers are still an issue, if a less frequent one;

Locks users into a particular mobile network provider; and

Since network operators are not banks, they cannot pay interest, offer credit, or other useful banking services, such as debit orders.

Power shift to operator and SIM – they think they have control but UI is so rubbish it makes programming a VCR clock look simple

Your data goes from Silo to big fat pipe

Approach four: voucher-based systems (MiMoney, AMMO)

Advantages

Familiar to consumers because of its similarity to airtime ;

No special hardware required by either customers or vendors;

No bank account or credit card required; and

Very safe since loss is limited to the value of vouchers. There’s no direct access to your bank account.

Cannot be tracked (well you can but lets pretend)

Disadvantages

Requires a bank account or credit card to be used most effectively. Trekking to a kiosk with cash sort of defeats the point of mobile money;

Without special hardware, the interface is clumsy for both vendor and customer. A credit card is still quicker and easier;

You cannot get the cash out once it is in the system unless you’re a merchant, so it’s very much a purchase-focused network, unlike M-Pesa.

The same chicken-and-egg dilemma as NFC.

All your lovely data is still not yours and could present certain strong players in an old sector with new powers to maintain dominance.