Discussion & Aggregated View of the Results

6 Discussion and Conclusion

6.1.1 Factors Influencing Mobile Payments

Academic literature suggested several inhibitors and facilitators to mobile payments.

However, none of them were claimed to be especially important. The experts were asked to evaluate four repeatedly mentioned factors that were found to influence the adoption decision of consumers and merchants: security, usefulness, ease of use, and costs. All experts expressed different opinions in respect to which factors were the most significant. This may indicate that no particular factor is in fact more important than another. Instead, related issues might have to be addressed simultaneously.

Ease of use and usefulness may be seen as being closely linked to the scenario rather than to the individual solution. Both were named ‘differentiating factors’. Consequentially, it may be argued that both are especially relevant regarding the specific business model or approach behind a mobile payments solution: The approach, i.e. the payment scenarios in which a particular mobile payments solution can be used, determines the general chances of success and dissemination. A mobile P2P payments solution that allows sending money to friends through their cell phone number spares their users typing in the lengthy bank details that are necessary for a regular money transfer from account to account. Given all other aspects are implemented in a sufficiently satisfying way, mobile P2P payments are then easier to use. The opposite may be true for mobile POS payments: they compete directly with cash and card payments at the point of sale. It may be argued that they present an additional, different method rather than an easier, faster, or in any other way superior method to pay for in-store purchases. Thus, it may be concluded that P2P payments have a higher potential than mobile POS payments.

Furthermore, usefulness was said to ‘add the most value’. The first expert stated that usefulness was especially high in scenarios, where no other payment means could be used:

Line skipping solutions, such as mobile apps that enable users to order food to pick-up at the location, do not accept cash or card payment to finalize the order. Consequentially, it may be argued that such approaches are particularly promising. Based on this argumentation, ease of use and usefulness may then be interpreted as factors that differentiate specific mobile payments approaches. Security and costs may be seen as factors that allow distinguishing between several mobile payments solutions that enable payments for the same scenario.

Figure 16 shows a structure, which describes the influential factors: ease of use and usefulness are the factors that allow differentiating between the particular approaches.

Security and costs are relevant criteria when deciding between several solutions that enable mobile payments in the same scenario.

Figure 17. Factors discriminating between mobile payments scenarios and solutions.

Finally, it may be possible to argue that mobile payments are only going to take off if they are seen to score higher in terms of usefulness or ease of use than another payment means.

Mobile P2P payments and line skipping apps might present the first steps into the mobile payments era. Once people adopt the behavior of paying their friends and family through their phone or enjoy the benefits of cutting waiting time through line skipping apps, the barriers to mobile POS payments might be less significant. If consumers can choose between two equally useful and easy to use solutions, they might be going to adopt the solution that is more satisfying in terms of security and costs.

The second point of analysis is closely related to an issue mentioned in academic literature:

the strong interdependence between the involved Key Players. Two experts believed this was one of the major reasons for the – so far – comparatively unsuccessful dissemination of mobile payments. However, the experts held different views regarding the most important players in the mobile payments environment: The first expert named consumers and merchants; the second called merchant, card issuer, merchant acquirer, and payment processor to be the most relevant; and in the third expert’s opinion the credit card services in connection with Apple were hard to beat. Similar to the previously discussed case, no common opinion but a tendency towards the provider side seems to have emerged. This may indicate that no

6 Discussion and Conclusion

individual player is more important than another. The interviews further revealed that in order to facilitate the wide dissemination of mobile payments, bringing together the stakeholders might be the next critical step; a standard was seen to be necessary. Academic literature indicates that it is essential to reach critical mass in order to establish a standard. The analysis of the status quo had shown that so far, several independent providers offer diverse solutions.

Given that the abovementioned criteria are met, it may be argued that solutions offered by players, which can draw on a large existing user base, are more qualified and thus more likely to reach widespread adoption.

Finally, it may be argued that the players on the provider side need to come to a mutual agreement before merchants and consumers can make a decision whether to adopt a mobile payments solution or not. This idea suggests that mobile payments are most likely going to take off when a provider with a large existing customer base can come to terms with the other stakeholders on the provider side. The large number of potential customers might then induce merchants to concentrate their efforts on providing the necessary technical infrastructure.

Apple Pay meets the criteria that were found to be relevant. If the German provider side can reach a mutually beneficial agreement, Apple Pay may in fact have the power to spur the rapid dissemination of mobile payments in Germany.

Trend analysis and expert interviews can provide insights into the Social & Cultural Aspects.

Through trend analysis, card payments were found to be more important and more common in the USA than in Germany. In addition, two experts confirmed that data security was less of an issue for consumers in the United States of America. Furthermore, the trend analysis showed that Germany is more hesitant when it comes to changing established habits and adopting new practices when considering IT technologies. Mobile payments need to be treated as a change in behavior rather than a change in technology. The first expert confirmed the forecast: he predicted that Germany would need more time to adapt to mobile payments compared to the USA.

These findings suggest that mobile payments may fit better with the payment and purchase patterns as well as the security preferences of US Americans. Therefore, it is reasonable to expect that mobile payments are first going to take off in the USA. This assumption is underscored by the overview of the currently available solutions; all but one are not yet available outside the United States of America. Germany’s image as a market, which is

neither especially interested in mobile payments nor easy to capture, could again influence US American providers and further limit their interest in the German market. As a consequence, the introduction of the respective mobile payments solutions might be slowed down even more.

The Technical Infrastructure was also subject to both trend analysis and expert opinion. No common understanding emerged but the following aspects have been mentioned: The trend analysis of internet and mobile phone usage suggested that the foundations of the digitization have successfully been laid in both countries. In both cases the historical data were compared to the S-curves and indicated that the most recent data are ranging closely to the specific forecasted ceiling levels. Furthermore, the volume of smart phone sales was selected as growth descriptor of the underlying technology of mobile payments. The logistic fits for both countries indicated that the infrastructure necessary to enable consumer acceptance, i.e. smart phone sales, was also sufficiently developed. The expectations of the first expert reinforced these findings, since he claimed that NFC-enabled terminals and phones were already in place. However, although the second expert also expected NFC to be the most important technology for in store transactions, he named the limited availability in selected devices as the technology’s weakness.

6.1.2 What is going to happen with mobile payments in the future?

At this point it is important to highlight that none of the three experts doubted that mobile payments would take off⁴¹. The following paragraph intends to answer the last sub research question and forecasts what is going to happen with mobile payments in the future. Payments traditionally fall within the scope of credit card services and banks. However, none of the experts expected mobile payments to cause major negative implications for banks if they continued to remain passive: So far, they did not express interest in mobile payments since payments were neither very profitable nor at the heart of their business. In the future, banks are going to focus increasingly on tasks related to their core competencies e.g. payment processing, existing bank accounts and loans, and credit assessment. Credit cards are going to gain further importance. Cash is not going to be replaced completely, but might – according

41 The US American expert even claimed mobile payments already had taken off in the USA.

6 Discussion and Conclusion

to one of the experts – only account for 25-30% of payments by 2050. These developments are similar to the transformation of the music industry: while a big part of the business is now digital, traditional forms of music still exist. The second expert was the only expert to mention cryptocurrencies. Even though they are no direct form of mobile payments, they have the potential to eventually challenge existing payment concepts. These, in turn, might have widespread consequences for the banking industry.

When looking far ahead into the future, customers might eventually even replace the POS terminal by checking out the goods themselves. This can be interpreted as an evolution of line skipping apps: Consumers paying for their goods through a certain mobile app may – upon verification – can proceed and skip the line at the supermarket checkout. It should also be noted that the future of mobile payments is not exclusively linked to (smart) phones. Other mobile smart devices such as smart watches, smart keys, or eventually chips that may permanently be worn by the customer are fit to perform the same payment methods.

All interviewees were asked what timeframe was realistic. No common theme emerged but the following thoughts were mentioned. According to the first expert, it might be ambitious but nevertheless realistic for mobile payments to capture 20% of the payment market within the next five years. The third expert made a more conservative forecast and called double-digit growth in mobile payments users realistic for the next years. At this point important insights can be provided if these forecasts are compared with the conducted evaluations: The trend analysis indicated that in 2014, after more than ten years, approximately 60% of the population use the internet to shop online. Nevertheless, internet retail still accounts for less than 10% of the total retail value. Even though the conducted trend analysis also suggested that technologies need less time to diffuse widely, it must not be disregarded that mobile payments were classified as habit rather than technology. Thus, the more conservative estimation might be more realistic.