Bridging The Last Mile For Mobile Payments

Mobile payments(1) show great promise, but nearly a decade after being introduced, consumers have displayed very little adoption and merchants have realized little profitability. According to mobile research and advisory firm Yankee Group, nearly 70 percent of consumers are interested in adopting mobile payments, but less than 14 percent have actually completed a mobile transaction in the past six months. A key reason for this lag is the “chicken and egg” problem: consumers won’t use mobile payments unless the stores at which they shop accept them, and merchants won’t accept mobile payments unless consumers use them. As such, a critical mass of merchant acceptance will be required in order for consumers to become habituated to mobile payments.

With respect to small businesses (i.e., “Main Street”), a core problem that has slowed adoption is fragmentation at the local retail level. Small businesses in America account for 54 percent of all U.S. sales (Small Business Association, 2013). Walk down any Main Street in America, peek into the stores and you’ll find a plethora of different POS systems, provided and supported by a large number of developers and service providers. This is all for good reason – local merchants have highly specialized needs, and as a result, the set of systems and solutions they use has become both vast and diverse. This complex landscape creates a challenging environment for the introduction of new payment technologies, and no single mobile payments solution has emerged victorious (Yankee…2013). Apparently, the “last mile” to Main Street is the hardest one.

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