This is one of the blogs that has waited on my to-do list for a long while, but I had to get to it. And I think Alan Moore's new book No Straight Lines is a perfect opportunity to talk about mobile money. And on mobile money we should listen to the master on that topic, Dave Birch of Consult Hyperion, whose book Digital Identity Management is also a must-read. So yes, Dave spoke at the Forum Oxford Conference last year and I really wanted to post a blog about his thinking about mobile and money and perhaps a few other related things too.
WHEN EVERYBODY HATES EVERYBODY
First of all, Dave has been studying the digital money opportunity for many years and observed the evolution of the mobile money ecosystem. He said of the mobile money industry that "The mobile wallet market structure is basically that everybody hates everybody else." So in mobile this just like the mobile industry in general (of its usual mutual distrust that can degenerate into hatered and back-stabbing) but with far more global players. It includes the mobile network operators/carriers, who hate the handset makers, who hate the operating system providers, who hate the payments providers, who hate the plastic and contactless payments system providers, who hate the credit card providers, who hate the banks, who hate the retailers; and then all of whom then together hate each of the related regulators which now means banking regulators, telecoms regulators and consumer protection regulators (plus competition regulators ie anti-monopoly watchdogs).
Spot on Dave! This is a quagmire haha, and it seems to only take off, if either the market has a very strong player who can do it alone, like NTT DoCoMo in Japan or Safaricom/Vodafone in Kenya etc; or else if after years and years of collaboration, the industry players can come together like in South Korea.
So if you thought mobile money is 'obvious' and has such superb benefits it has to happen immediately, and now as more and more players from Nokia to Google to Visa to Vodafone to Coca Cola to Tesco to Paypal to many big banks are talking mobile money, don't think it will happen overnight. Remember, Turkey is the first country to issue a target date for the end of cash, and that year is 2025. So don't throw away your credit cards just yet haha..
EVERY PHONE CAN.. RECEIVE PAYMENTS
The Dave talked a lot about mobile in the money opportunity, with great insights. Dave said first of all, that "The point of mobile payment is not that your phone is your card, but that the phone is your terminal." Brilliant, absolutely true Dave! I've been saying this for a while too. Totally true, yes. The easy thing to notice, is that you can use your phone to make the payment, to replace the plastic card or banknote or coin, to pay for your parking or your Coca Cola at the vending machine or your train ticket. That is an evolutionary shift, from one electronic gadget in our pocket (the plastic card with the magnetic stripe and the security chip) to another (our mobile phone). But the radical shift is the other side, receiving payments. The average person cannot receive payments from a plastic card like a Visa card or Mastercard or a banking card. We have no way to verify that card is valid, and that it has a balance, and to deduct the paymnt from it. But any mobile phone can act as the receiving terminal for payments. We consumers can become 'merchants' in that way, to handle payments, and real merchants can upgrade to digital payments without the expensive credit card handling equipment. This is what is powering so much of the mobile retail in countries from the Philippines to the beaches in Brazil.
And that is something Dave talked about as 'Mobile Enhanced Retailing'. Its not that mobile will replace the retail shop - which it can do in some extreme cases like the internet did with music, books, travel etc. Sure in some extreme cases in retail, an m-commerce site can replace the retail store; but in most cases, the mobile is best suited to enhance our retail experience in anything from driving footfall to the stores, to adding to the experience within the store such as treasure hunts and getting more information about the goods, to speedier handling of the payments etc.
BETTER TO LOSE PHONE THAN WALLET
Then the usual problem most of us 'Luddites' have about mobile payments, is that we fear the single point of contact problem. That it would be dangerous to have our full wallet on our phone, and what if we lose our phone, or its stolen, or it is broken, or the battery runs out. Haha, yes, true, but the same problem is also with our plastic, what if your Visa card or American Express is lost, or stolen, or broken in an accident, or wears out so that it cannot be read anymore, etc. Dave made the very relevant point that we all in mobile money make almost daily - a payment solution is far more secure and far easier to recover from than any other payment mechanism. Yes its true. Dave said it this way: "Its much better to lose your phone than your wallet." Why? First, if you lose your wallet, all the cash in it will usually be gone no matter what, in most countries and most situations. So even if you are lucky to get your wallet back, you'll probably have lost the cash that was in it.
But what of the credit cards and banking cards and your driver's licence and other identity cards, etc. How tedious is it to replace those. How long will it take for you to be rush-delivered a replacement American Express card? And then imagine how much worse that all can be if you are travelling and where is the next place where you will be long enough for a Fedex delivery of your rush replacement credit card can even be delivered. Compare that to mobile. On mobile, your mobile wallet solution can have user-set limits that you can alter when you want, on what levels of payments (if any) can be authorized without security pin codes etc - so the mobile can work like a contactless card like Octopus, Oyster etc. But this is far more safe, because you can lock your phone with a password (that you cannot do for the contactless card) and you can further protect your banking access with its own limits and security.
Then take your credit card and banking card, with their "chip and PIN" security etc. That all is already built into the phone, but actually your mobile phone is far more secure natively than the best chip and PIN card. And this is before you then set your own limits if you want, that an be altered by the user, and the further security that can be deployed in the handset, in anything from thumbprint readers to retina scans to voice pattern recognition - all things that a plastic card cannot hope to match. And this is before we take the power from the network - like location-based security and proximity based security. If the network knows you usually move from your home to your office to the school of your children and the shopping center near your home it can provide minimal security at that level. If suddenly the mobile phone moves to another city - then it can be set to notice the unusual travel pattern - and only then ask for a verification password etc. Same for proximity, so imagine a family travelling. As long as the phones are together, no passwords are needed (its almost impossible for a pickpocket to steal simultaneously all phones from the pockets of four family members at the same time) but the moment one of the phones moves away from the group, the password protection is enabled. Etc etc etc.
HOW TO REPLACE MOBILE WALLET
But that was on the security side, actually the bigger benefit is if you lose your mobile. If you lose your cash, or contactless payment card, that money is gone. If you lose your credit card or banking card, you may lose some of your money and you have to call the bank to cancel the cards and then it takes at least days, may take weeks, to have your cards replaced. It will typically be even more of a hassle to replace identity cards like your driver's licence or passport.
But on mobile, the replacement is the fastest and most convenient. If your mobile wallet is enabled with your operator/carrier, all you need to do, is borrow someone else's phone, call your operator/carrier, tell them your mobile phone is lost or stolen (or broken, fell into swimming pool at your hotel). They will ask your usual security words etc, and then they can enable your full mobile wallet - including all your credit cards and bank accounts and payment systems exactly as they were - onto any other phone on any other SIM card you designate. So imagine the family dad having a bit of a show-off moment at the hotel, and falling into the pool, and finding that the phone is ruined. He just uses his child's phone, calls the operator/carrier, and has the mobile wallet functionality transferred to that child's phone (which daddy will borrow for a day before they can go to a phone store to buy a replacement phone for daddy).
This is BY FAR the most convenient way to replace lost or ruined or stolen or destroyed payment methods. It is far better to lose your phone, than to lose your wallet. And you are far better off, having your credit cards and banking accounts enabled onto the mobile than on any other forms like plastic cards. Now, obviously the retail world will need to catch up to this reality, only a few countries so far can do full payments in anything, in mobile, but that will soon evolve too.
Dave gave some interesting facts, like that Google has 750 people only in their payments team, this is far more than any telecoms operator and far more than any bank has in its mobile payments unit. No wonder Google Chairman Eric Schmidt said last year that mobile money was one of Google's three highest priorities.
MOBILE BECOMES STORING MECHANISM FOR REPUTATION
And the most far-reaching thought Dave expressed that I think comes to the core of what Alan and I have been writing about in our book Communities Dominate Brands and Alan in his follow-up book Social Media Marketing and now obviously in his latest, No Straight Lines, is that thought of the power of the data collected. What Alan called the new Black Gold for the 21st Century. Dave said it like this: "Mobile is the mechanism for storing your identity and reputation." Its more than payments. Its more than money. Its on those themes that Jonathan MacDonald writes about 'Advocurrency' and companies like Qustodian now are working on to help us manage our identity and reputation and its value, via mobile. Imagine how much information a retailer loyalty card will collect about us. Imagine how much information a credit card or bank account will collect about us. And imagine how much Amazon for example knows about our preferences and purchases.
Now imagine a near future when all of those data points get collected via a single point, our mobile phone. And our consumption behavior can be combined with our communication behavior. Its not just that Tomi likes James Bond and will see SkyFall the next 007 movie, but how many people did Tomi talk to about the movie before and after? Did Tomi influence others to go see the movie. The power of mobile money will be multiplied when we understand the value of influence, and that mobile, will merge with money, will merge with identity, will merge with communications, will merge with influence. That is why Google is in mobile money haha.. That is why this is such a huge race.
Excellent presentation Dave, truly excellent with great insights.