PayM: Not the winner in mobile payments

PayM seems to be gaining traction with some of the larger banks including Lloyds and HSBC now actively marketing the use of their service to their customers. Some 400,000 users are reported to have now signed up to use the service. I’ve been asked if they are are the next big thing in mobile payments space. In short, I think they’ll get some traction, but they’re not the endgame. Here’s why…

In my opinion PayM has received interest from some of the banks as a quick plug-and-play solution to show they are still innovative. Particularly alongside offerings like Barclaycards PingIt service launched in February 2012. But the banks are playing fast-follower again and not really competing with the big boys who have yet to weigh in. PayM has got some traction based on marketing from the member banks to their customers. It’s not competitive advantage they’re accumulating.
In my opinion there are a few factors that are still at play as the market develops:
1. The payments market is about to get crowded
Apple are backing BTLE, Amazon is working on it’s own strategy, Google have changed their mobile wallet architecture so that credentials are no longer processed on the device, but sent back to google servers (closely matching Apple’s iTunes model), Paypal just announced they are backing BTLE too.
2. Customers move to the services that have greatest benefits with lowest barrier to entry.
That means that the provider who manages to provide the best user experience, and integrate it well with other high value customer experiences, will win out. The problem with payments at the moment is a lack of standards. So one of the big players will need to own the whole value chain to get it right. The banks can’t get out of their own way, and are so caught up with regulatory issues and legacy core architecture that I’d be surprised if they spontaneously produced a masterpiece and turned mobile payments into exemplar of how to do UX well.
3. In my opinion, payments will ultimately not exist as a stand alone service.
Payments are not a focal point of customer behaviour unto themselves. The payment transaction is just an enabler of other consumption. So ultimately the best user experience is where the payment itself is hidden entirely. The end user doesn’t have to interact, or stop (much) to get it done. RFID was one of the marketing dreams of the last 10 years that had real promise for retail because it allowed payment to become ‘invisible’. Shoppers would simply push a fully loaded trolly through a a scanning area at checkout, and each product’s RFID tag would instantly be scanned and totalled. Like Magic! It’s yet to be delivered upon, but it sets the bar for what payments should become. Invisible.
On that basis my personal view is that providers who are able to offer payment as part of a wider ecosystem of services that customers already use, and ensure that the whole user experience is good, will then get mass adoption.

Grant Cleveland

Grant is Start-up investor, advisor, mentor focussing on very early stage ventures. Particularly interested in start-ups and founders who are using tech to have a positive impact on the world.


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