Sunday, May 20, 2012

What's In Your Mobile Wallet?

I’ll admit it. I’m fascinated but anxious about using my smartphone as a wallet. Of course that hasn’t stopped me from checking my bank balance or looking for an ATM. I love the portability and the convenience but to go cashless, well — I’d need to be threatened with something like having my hair set on fire. Evidently I’m not alone. This month MasterCard WorldWide released a study that shows that the world’s consumers aren’t quite ready for mobile payments to become mainstream. 

The study examines the adoption of mobile payments globally. It produces a formula that indexes the technology preparedness of the country with their population’s eagerness to use it. They call this index the Mobile Payments Readiness Index (MPRI). This clever MPRI runs on a scale of zero to 100, with 100 representing complete replacement of your favorite plastic cards with your mobile phone.
 
The research sets a Mobile Readiness score of 60 as the point at which mobile devices account for an appreciable share of the payment types defined in the study. Think of it as the “hot and ready to adopt” number. Of the 34 countries that were indexed, not one received even a score of 50. In fact, the average of all 34 scores was 33.2. So according to this data, our world is not yet ready for mobile wallet prime time. But there are some interesting takeaways.
 
In terms of consumer readiness, 9 of the top 10 top scoring countries are located in the Middle East, Asia, and Africa, with Kenya the top scorer of all of the 34 countries evaluated. This is attributed to Kenyan consumers’ extremely high levels of familiarity with and frequent usage of mobile payments, a result of few physical banks and the success of M-Pesa.
 
Of the 34 countries, the United States received the highest score in the environment component. This component measures economic, technological, and demographic elements such as a market’s per capita income and consumer access to the internet. The high score was a result of the household expenditure per capita in this country of three times the index average ($33k vs. $11k). This translates into we-can-afford-it, I believe.
 
Singapore took the top ranking in the infrastructure (can you hear me now?) component, as 100% of the population is covered by a mobile network, compared to the overall 94% index average. Within Europe, UK consumers demonstrated the highest levels of familiarity with and willingness to use mobile payments.
 
Why should you care? The mobile wallet represents the first major change in how customers can pay at stores since the credit card was introduced in the 1960s, and this study by MasterCard helps define those countries with the most promise for rapid adoption. Someone is going to get rich. The proof is that participation in building this digital venue continues to gain momentum and the players are some of the biggest names in technology, finance, and retail, like MasterCard, Google, Wal-Mart, AT&T, Visa, and PayPal, to name just a few. 
 
Smart businessmen will use this research to design solutions to make banking and the retail purchase process effortless in promising countries while creating profits for themselves and their companies. Success will be based on timing and innovation that addresses this MPRI, accurately gauging the consumers’ and their countries' readiness. So what will you and I do? Perhaps try to build on this lucrative technology while it is still evolving? Anyone besides me need the threat of a hairbrush and a match?