Someday in the near future, you’ll walk into your local grocery store with a basket of your own and no wallet, just your smartphone. You’ll pluck all sorts of futuristic foods and futuristic goods off of futuristic shelves, and instead of paying a cashier when you’ve finished shopping, you just walk right out. You see, you’ve already scanned each and every item on your own (and presumably weighed out your produce?) with your smartphone’s mobile wallet application. Your account has been debited. You walk out of the airy, line-free, uncluttered supermarket in a hurry — you have a spaceship to catch!
This is only a slight exaggeration of the world that tech utopianists paint for us when they describe what the mobile wallet will do for us as consumers. Simply by connecting other financial products — checking accounts, credit cards, etc — to our mobile phone, and using either NFC or GPS technology, we can make our experience buying stuff just that much easier than it already is. As things stand, you need to let someone else scan your things for you then reach into your wallet and run a plastic card through a card reader. Within seconds, your transaction is approved, and you probably don’t even have to sign — a travesty, apparently, when you could be doing so with your phone. This, I submit to you, is the central problem mobile wallets will have in the United States: we don’t really need them, but people are constantly telling us that we do.
Central to the promise of the mobile wallet is what it will do for us as consumers, but rarely do boosters consider what it will mean for us as citizens. (That’s not surprising — when have tech utopianists ever cared about citizenship?) In the mobile wallet booster’s mind, you and I are constantly walking around nice urban areas, desperately in need of a way to spend money, but utterly confused as to how or where we might do that. And so our phones alert businesses to our presence or proximity, and businesses, in turn, will blast our phone with deals, in order to entice us to come spend our increasingly limited disposable income with them, instead of their neighbours. And once we get there, we’ll only have to tap our phones once when we pay for exactly the good that they suggested we buy!
Whereas in the old days, we’d still be at the register fussing with dollars and cents or a debit card — like animals! — in the future we’ll already be on our way down the street, our phone-wallets buzzing with more nearby deals for us to go spend more money on the exact things that nearby businesses are texting us about.
The absurdity of this vision of the world warrants spelling out. Frequently, the argument that mobile wallets will catch on in the United States is predicated on the notion that “marketing opportunities” for “young people” is what will drive conversion. If you don’t examine this pap, you’ll miss the point here: walking around an area with businesses will make you subject to a constant, hyper-personal onslaught of phone coupons, and this is why people are convinced that you will stop carrying cash and plastic. Does this sound better in any way, shape or form than our current situation? If your answer is yes, allow us a follow-up: have you ever lost or broken your phone? or had it run out of batteries while you were out? Imagine now that when one of these three modern day travesties befalls you, you are also completely without any access to your money, no matter how much you may or may not have.
Under our current state of affairs, we are indeed dependent on all sorts of technology to support credit and debit cards: the magnetic strips, card readers, POS terminals, Internet/phone uplinks, payment processor servers, bank servers, etc, etc. And yet you most likely won’t drop any of these in the toilet at the bar, or let one fall out of your back pocket in a cab — it’s impossible. You are not personally responsible for the massive infrastructure that makes your credit card a conduit for cash; with a mobile wallet, you basically will be.
It’s different there
This isn’t to say that the mobile wallet doesn’t have plenty of promise — it does, just not here in the United States. In fact, in the developing world, mobile payment penetration is much more thorough. As long ago as 2010, a full half of Kenya’s population used M-Pesa, the mobile payments partnership between Vodaphone and Safaricom. M-Pesa allows Kenyans to transfer money to one another using just their mobile phones — any sort of mobile phone, not the little computers we seem to assume are a prerequisite for mobile wallet penetration in the States (presumably because it will allow for a two-way communication channel for marketers to exploit, but I digress).
To a mobile wallet booster, this looks backwards: why is an underdeveloped nation like Kenya beating us at this? The answer is, of course, because it’s underdeveloped. To understand this somewhat obvious point, we turn to the BBC’s 2010 story on the topic. Quoted below is Seema Desai, the director of Mobile Money for the Underbanked:
“In rural Kenya it is completely different. My bank is hours away and I don’t have Internet access. But I do have access to a mobile phone. Even if you could get to a bank branch you’d need to prove your address with a utility bill. To be very practical about this not everybody in developing markets will pay utility bills, they may not even have a permanent address.”
The appeal of paying with your phone is quite different when access to cash and credit are so incredibly limited, as it is in many developing nations. There, paying for goods with phones actually has a value proposition for users, and not for marketers. A study from GfK NOP, a market research firm, suggests the same. To wit:
In more developed markets like the US and Europe, financial systems have been established for much longer. The process of paying for products in store is already a fairly convenient one, with most shops accepting credit and debit cards. The introduction of mobile payment services in these markets therefore receives a more mixed response from consumers. The appeal of mobile payment services is lower than developing markets, with circa one in two people finding the prospect of using mobile payments appealing.
Think about how different your life is from a Kenyan’s. You have a supermarket that is practically sterile, indoors, and well-refrigerated. You can get a delicious rotisserie chicken for, like, six bucks. You don’t have to barter with the checkout lady over each and every item’s price. Someone else is there to bag your goods for you, and maybe walk you out to your car. And to pay for all of it, all you have to do is pull a card out of your wallet or purse.
Why, why, why, does anyone think this arrangement needs to be upended by mobile phones? The only argument rabidly in favour of it breathlessly touts Google Wallet’s job-killing potential, completely unironically! It’s hard to understand why anyone should be excited about a thing that is not only completely unnecessary, but would also help get rid of yet another low-skilled entry-level job (unless you’re a total jerk).
Young or poor or maybe both
The one ray of hope I can identify for mobile wallets and payments is not a particularly bright spot: it’s the issue of young people and the underbanked, and the increasing overlap between the two groups. We reported earlier this year that mobile banking — a slightly different service, to be fair — has the potential to be empowering for the underbanked. Those whose primary financial services needs are transaction-based, and who may not live near bank branches, these sorts of technologies can really help make life easier. And young people, too, who are increasingly moving toward non-traditional financial products — if you believe the providers of non-traditional financial products — or at least away from banks, and who are increasingly phone-obsessed, do provide another potential growth area for mobile wallets.
However, that’s bad news for the marketing gurus who think that mobile wallets will revolutionise anything. Young people and the underbanked aren’t constantly walking around SoHo looking for a way to wantonly fritter away their money.
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