By Terfel Roberts

Movements in the mobile payment market are really hotting up. We heard last week that US retailers, including Wal-Mart, Target and 7-Eleven, are taking a stake in the mobile payments space, and are putting years of competitive differences aside to develop a mobile commerce platform – the latest entrants to a crowded field of search engine suppliers, carriers, retailers  and financial organisations. So what’s behind this latest development?
Ordinarily it might be surprising to see such well-known – and rival – brands working so willingly together, however, it was only a matter of time before this type of initiative emerged. Global research firm Gartner estimates that mobile transactions will rise from US$172 billion today to a staggering US$600 billion by 2016, and retailers are obviously keen not to miss out on the action.

Large retailers like Wal-Mart claim that they are in the best position to get customer buy-in for a mobile commerce, or wallet scheme. After all, many have been tracking customer buying habits for years using loyalty card schemes, and would be understandably unwilling to relinquish the advantage and insight which that provides them.
Then, of course, there is the issue of cost – with charges levied on the retailers by the financial industry being an ongoing bone of contention for retailers. It wouldn’t be illogical to suggest that merchants would welcome the chance to evade some of the tolls connected to payment processing by developing their own mobile commerce platform.
However, while you can hardly blame retailers for wanting a slice of the mobile payments pie, the challenge ahead of them is a significant one.
Not only will retailers have to find a solution to the consumer concerns about mobile payment security, but if they want to offer the payment flexibility that consumers will demand, they will also need to have the processes in place to pull different payment methods together. It is a constant balancing act between security and ease of use that must be carefully managed to minimise against breaches but ensure the tool is not so hard to use that it puts people off from signing up.

Many in the industry believe that until there are standards and agreed processes in place, the high number of different payment technologies and industry participants means that the roll-out and adoption of mobile payment services will be slow. After all, Wal-Mart, Target and 7-Eleven are up against some tough competition, including the likes of Google.
However, when the standardisation procedure is as complicated as this, involving many different payment methods and stakeholders, it either has the effect of holding the industry back, or arriving too late to have any beneficial effects. Take the example of the Enhanced Data rates for GSM Evolution (EDGE) technology – by the time that an EDGE standard was introduced, its capabilities had already been eclipsed by those of 3G.
Therefore, perhaps instead of waiting for standardisation of the mobile payment market, we should be looking at ways we can eliminate the need for collaboration. This would remove the need for conflicting stakeholders to work together and, as a result of that, the development of industry standards, allowing for greater adoption of mobile payments. With so much going on in the market at the moment, there is one thing we know for sure – the customers are king and only when they feel that mobile payment is safe, secure and easy, will it really take off.

Terfel Roberts is the UK managing director of  mobile payments firm Danal CS&F.

The editorial views expressed in this article are solely those of the author(s) and will not necessarily reflect the views of the GSMA, its Members or Associate Members.