Payment Scenarios

Pousttchi (2008) and Pousttchi & Hufenbach (2012) identify two general concepts: ‘mobile payments inside mobile commerce’ and ‘mobile payments outside mobile commerce’. Inside m-commerce, consumers can use mobile payments to buy value added services, such as ring-tones. Outside m-commerce mobile payments become mobile services themselves (Pousttchi, 2008). The potential scenarios are ‘Stationary Merchant Automat’, ‘Stationary Merchant Person’, and ‘Person-to-Person’¹¹.In addition to the scenarios presented by Pousttchi et al.

‘Line-Skipping Apps’ are introduced in this thesis.

Stationary Merchant Automat

The stationary merchant automat scenario refers to payments for goods or services at a physical point-of-sale. In this case, a vending machine, i.e. an unmanned point-of-sale, acts as the merchant. Typical examples include ticket machines or parking meters. As the use of cash or credit cards is often inconvenient in such a scenario, it is relatively easy to achieve advantages over other payment methods. Studies found that the automat scenario shows very high acceptance rates with customers in developed markets (Pousttchi, 2008). So far, quick-service oriented industries, such as fast food restaurants, gas stations, ticketing and vending machines have principally adopted mobile payments for daily purchases (Ondrus & Pigneur, 2006).

11 In their articles, Pousttchi refers to person-to-person payments as customer-to-customer payments.

Stationary Merchant Person

The stationary merchant person scenario includes payments for goods or services at a manned point of sale. A typical example is the use of mobile payments at supermarkets checkouts.

Even though the stationary merchant person scenario promises much higher potential revenues than other scenarios, well-established payment systems (e.g. cash or payment cards) complicate achieving a sufficient relative advantage (Pousttchi, 2008). This scenario is found to be rather unconvincing in developed markets, where convenient payment systems are already in use (Pousttchi, 2008). However, recent developments show that most of the dominant market players have directed their efforts towards this case (Pousttchi &

Hufenbach, 2012).

The Stationary Merchant Person scenario and the Stationary Merchant Automat scenario both deal with payments at the point-of-sale (POS). Therefore, the term mobile payments at the POS will hereafter be used to refer to both scenarios.

Person-to-Person (P2P)

Pousstchi’s (2008) last scenario refers to the transfer of money between consumers with no merchant being involved. Individuals can send or request money using a mobile application¹². The following example is possible: A specific mobile P2P payments service links the bank account details and mobile phone number of its registered users. If user A and B are registered for the same mobile payments app, user A may send money to the user B – and vice versa. To that end, user A needs user B’s mobile phone number. When user A makes a payment to user B through the app, the money is directly transferred to user B’s savings account. It is noteworthy, that neither of the two users has to reveal their bank details to the other user¹³.

The P2P scenario strongly depends on the percentage of the population owning a bank account. In developed markets where this condition is fulfilled, customers often attach a very low importance to the P2P scenario, which is reflected by consumers’ low willingness to pay a fee for such transactions (Pousttchi, 2008).

12 This thesis will further use the short form ‘app’ to refer to a mobile application.

13 A similar app is already in use in Denmark: The ‘MobilePay’ app offered by Danske Bank recorded 1.8 million users in January 2015. Further information can be found on http://www.danskebank.dk/mobilepay.

4 Mobile Payments

Line Skipping Apps

The last scenarios was not described by Pousttchi: The Deutsche Bank (2013) mentions so called line skipping apps¹⁴. These apps allow customers to pay for goods or services in advance and hence cut waiting time, for instance, in supermarkets or restaurants. The function is similar to mobile ordering, whereas the essential elements are the possibility to order ahead and pay ahead using a mobile app. Only the combination of the two allows customers to skip the line¹⁵. Theoretically, the idea fits with delivery as well as take-out and is independent of the customer’s location.

Various forms of mobile payments have been mentioned so far: Direct and distant mobile P2P payments, mobile payments at the POS, line skipping apps, and mobile payments within mobile commerce. At this point, it is valuable to classify the different scenarios. This can be done by location (proximity vs. remote payments) and involved parties (person-to-person vs.

person-to-business). Proximity payments are a contactless version of face-to-face commerce (Hassinen, Hyppönen, & Trichina, 2008), meaning that the involved parties have to be in proximity to each other in order to make the payment. Remote payments refer to the opposite case, where the involved parties do not have to be in the same locality. Figure 3 shows a scheme where the distinct scenarios are classified and arranged in four quadrants.

Figure 3 allows the following classification to be made: Proximity payments include direct mobile P2P payments between individuals and mobile payments at the point-of-sale (Schickler, 2013)¹⁶. While direct mobile P2P payments involve two private parties, mobile payments at the POS, i.e. a supermarket checkout or refreshments automat, refer to payments made between a private and a commercial party. Distant mobile P2P payments and mobile commerce both fall into the category remote payments. While distant mobile P2P payments are similar to the case of direct mobile P2P payments and engage two private participants, mobile commerce refers to person-to-business payments. Line skipping apps always refer to

14 Interestingly, academic literature on mobile payments does not explicitly mention this scenario. However, mobile ordering has been mentioned (Kulkarni, Dascalu, & Harris, n.d.; Lukkari, Korhonen, & Ojala, 2004), without further discussing the integrated payment function.

15 The idea is similar to ticket purchasing services, for instance, museum tickets that can be bought online and allow to skip the line at the venue.

16 It should be highlighted that the initially published graph merely refers to the upper right quadrant as actual mobile payments (Schickler, 2013). While this may be the initial association with mobile payments, the other scenarios are equally as significant.

person-to-business payments. Based on the definition of proximity payments they need to be classified as remote payments¹⁷.

Figure 3. Classification of mobile payments.