The Gimlet Eye

The Gimlet Eye

You Can’t Ignore Google for Mobile Payments

It is instructive how fast the conversation about mobile payments has shifted from cell phones generically understood to what we have come to call smart phones. I suppose it was the advent of the “app” that did it, a profusion of highly versatile code that forced a sea change in mobile technology and caused developers, banks, and merchants to look to far more intelligent devices.
Hence a handheld device that few outside the corporate world had heard of two or three years ago has come to dominate mobile financial services, and may one day soon dominate electronic payments. Mixed up in all this is one of the biggest success stories in American business.
I’ll get to that in a minute. First, consider that, at the end of November, some 61.5 million U.S. consumers owned a smart phone, according to Chicago-based researcher comScore Inc. That represents growth of fully 10% over the number at the end of August. Not 10% over the previous November, but over a mere three months earlier. Such torrid growth suggests that strategists who are working on person-to-person, bill-payment, near-field communication, marketing, and ticketing apps can count on a wildly expanding potential market.
But they had better be prepared with apps that work on the right mix of operating systems. Here’s where that success story I mentioned a minute ago comes in. No matter which measuring service you consult, all seem to agree that the fastest-growing OS by far is Google Inc.’s Android. This product has leapfrogged from a 4% share, in terms of adoption rate, in July 2009 to a 27% share by the end of 2010, according to Javelin Strategy & Research, a payments-research firm in Pleasanton, Calif. Twenty-three points of share in 18 months. Granted, this a young and fluid market, and Google has made the OS available on a multiplicity of handsets. But how many products can claim even half that kind of growth?
So how are mobile-payments strategists reacting? Not fast enough, it seems. Many remain wedded to Apple’s iPhone, which remains popular and is perceived by consumers to be more secure, according to Javelin. Nothing wrong with that. But among 19 mobile-banking programs surveyed by Javelin, just 37% offered an Android version. And, by wide margins, Android users are more interested than smart-phone users in general in using their handsets to perform financial tasks, including point-of-sale payments.
It’s not surprising that Android’s meteoric rise caught planners flat-footed. But now’s the time for a quick course correction. Not adding Android to their mix, and soon, could prove a crucial mistake in a nascent and very promising market.
John Stewart, Editor
john@digitaltransactions.net