Tuesday, April 10, 2012

In Defense of Plastic


Over the past several months I have been writing a lot about mobile payments.  That’s because it’s a hot topic with plenty of excitement and news.  I’m certain that all the relevant search terms have increased traffic to my blog.  But are we taking this all a little too far?  What if mobile payments don’t live up to all the hype?  While I am pretty sure that won’t happen and that this technology will play a major role in the future, I am not convinced plastic will disappear anytime soon.  For one, I know that Payoneer continues to grow at a phenomenal rate.  The market for prepaid cards – especially for specialty markets – is also growing.

What’s got me thinking is a number of stories and reports I have read over the past several weeks.  According to an article in Bloomberg, “Google Inc. is weighing changes aimed at improving its Google Wallet mobile-payment system following slow adoption . . .”  In another article I found on intomobile.com, American Express articulated views that mobile payments were four to six years away from the “tipping point.”  Finally, a recent report from the DRF stated that, “a majority of retailers, 63% of the respondents, indicated that only 2% or less of their sales are generated from a mobile device.”  These stories definitely have a different tone than most of the news we’ve seen lately.

So, what if it turns out that people simply don’t want to use their phones or other smart devices to make payments?  It’s not an unreasonable position to take.  For example, I believe that many people will find waving their phone no more convenient than tapping their PayPass-enabled MasterCard.  In fact, the phone is much heavier.  And with some mobile solutions, you’ll also have to navigate through some phone menus or enter a PIN.  In the early days of the Internet, people were afraid to use their credit cards, and terrified to use their debit cards.  I feel that some people will be similarly afraid to use their phones as payment devices.  They can be lost or stolen just as easily as a credit card.  How many people will drop their phones when making payments at the POS?

Mobile pundits should remember that credit and debit cards have become so ubiquitous because they are so convenient and have a great form factor.  Also, cardholders rarely have any liability with fraud or lost or stolen cards.  In order for consumers to adopt mobile technology en masse, I think that the solutions will have to be much more convenient than plastic.  And that has yet to be seen.

9 comments:

  1. Yuval Tal writings always are to the point and quite true about future trends in money matters, including this note on plastic money vs mobile money. It is true, plastic money is going to stay for its higher reliability.

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  2. This is very useful information as all of us are using mobile and making some payment through mobile. It looks easy for making purchase on mobile but, using credit card or debit cards on mobile purchase is really very dangerous. As your information will really very helpful to users like me.

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  3. I agree with your view. I don't believe that I would feel comfortable using a cell phone as a method of payment because it can be very easy to lose, get stolen, or wash a cell phone in a load of laundry (happened to me on more than 1 occasion. Plastic is much more convenient. kknapp78

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  4. Yes carrying a credit card is very convenient. With a credit card on hand you are safe from bad elements because you just can cancel it if it is stolen. But of course you have to take care of your credit card. Paying services or goods using a credit card saves you time and effort of counting the exact amount for such services or goods.

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  5. I completely agree with you. Debit cards and credit cards have made shopping extremely convenient. Most of my shopping is done using my credit card. though there are advancements being made in mobile payments, I have doubts over it's adoption by people. I am personally not excited by mobile payments. I will certainly continue to use my credit card for my shopping.

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  6. Personally, I am resistant to this kind of payment option. I don't have a smart phone, for one, and I'm also leery about what would happen if the phone were to go missing. On the other hand, having a wallet go missing is also an inconvenience and having to go through all the cards one by one to cancel them is a HUGE undertaking. The idea of having everything in one place, on a phone, rather than packing several cards IS attractive, but it just seems scary to me. Although I'm sure before I know it it will just be the norm and no one will even think twice about it.

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  7. This is highly true. I believe that there may be some people who will simply refuse to use mobile transactions simply for the fear of network failure, or mobile hacking, etc. There is yet one possibility that many people might still be afraid of. This may be mobile cloning. Somehow I still believe that while mobile transactions make it easier for many people, there is still the need for the physical options like the credit cards, etc.

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  8. I think you are right. Credit cards always had the opportunity against cash but with one main flaw, the cardholder didn't know how much he/she charged it. On the other hand with prepaid cards, the holder knows exactly how much he/she is charged, there is no chance of him getting cheated or "fraud-ed" and even if his/her card is stolen he/she won't be overcharged as this happens in credit cards steal cases.

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  9. I enjoy shopping online and then paying by credit card. However, I haven't tried to pay by the mobile phone yet. It is a new information for me. I have learned something about it from this blog.

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