Written by Scott Swarts, CEO of MetraTech
We live in an increasingly fast-paced world that is driven by our desire for instant gratification. We’ve replaced mailing a letter with sending an email; the result is instantaneous, but increased speed can sometimes lead to mistakes, sacrificed quality or unintended outcomes. We see these adjustments and improvements across the board, and one of the latest industries to get hit is payments. In the interest of more convenient transactions, cash could become a thing of the past. The availability of mobile payments and wallets is rising, but the transition to these technologies won’t go as smoothly as planned for service providers without the right infrastructure.
Our society chose cash as the go-to payment method long ago. Even when we developed the technology and infrastructure for credit cards and checks, we did not immediately adopt these new options. In time, however, they did become mainstream choices; cash was not quite replaced, but society got a taste of unobtrusive, user-friendly options, and thought leaders in the payments industry are looking to take it to the next level. Carrying credit cards usually means carrying some sort of wallet for them as well, and in the age of tiny clutches and skinny jeans, the real estate in consumers’ purses and pockets is a hot commodity. Consumers concerned with space saving who will be the most interested in more compact payment options. Research shows more than 50 percent of mobile users in the major global markets have smartphones, so rather than try to fit another item in consumers’ over-crowded pockets and purses, why not put credit card capabilities directly in the phones that are already such a common accessory? Consumers will simultaneously save space and gain convenience. This is a simple enough development in theory, but in practice, it’s getting mixed results at best.
Mobile payments, most often backed by contactless near-field communication (NFC) technology, seem like a seamless process for consumers: they go to cafes, order sandwiches, wave their phones in front of readers, eat, and go on their way. Consumers make their desired purchases with literally a flick of their wrists. That’s the consumer’s perspective, but what is happening behind-the-scenes? Money is moving, just like with any transaction, but now there are phone carriers, network providers and NFC developers involved. Too many cooks in the kitchen cause trouble, and the kitchen of a mobile transaction is pretty crowded. Technology and integration aside, many chefs deem themselves a Michelin 3-star and insist on the appropriate level of compensation. The more parties involved, the greater the potential for problems. These may be problems of which the consumer isn’t even aware, but which are all too evident to any business attempting to implement a new checkout system. Without a payment platform capable of handling more advanced multi-party transactions, what begins as a user-friendly feature becomes a bigger hassle than simply asking customers to continue carrying bulky wallets.
These back-end infrastructure issues are already starting to expand past the mobile payments sphere. With advances in machine-to-machine (M2M) technology, we now use connected devices that present their own payment infrastructure problems. For example, our cars will include LTE capabilities, revolutionizing the automotive and communication industries. However, just like with mobile payments, this prospect creates some unseen obstacles. Any company that has a hand in this capability will need to rethink its start-to-finish compensation processes. Auto manufacturers and dealerships will need to factor in this additional feature when putting together payment plans and option packages for the consumer or fleet manager — plans that will need to incorporate the networks and carriers involved in the system. We are once again faced with a development that sounds great to the theoretical consumer, but presents back-end problems for the service provider that is simply trying to evolve its product.
The supposed convenience of these enhanced technologies is irrelevant if the process isn’t streamlined for all parties involved. The best way to get things moving smoothly is to ensure that all parties in the value chain are appropriately compensated. Companies need to plan ahead and implement billing and compensation platforms that are capable of keeping up with their new products. Traditional subscription plans and point-of-sale systems are quickly becoming outdated; for the sake of the convenience-seeking consumer, if these industries want to get on board with the latest mobile payment and M2M capabilities, they will need to first get on board with the latest payment platforms.
About the Author
Scott brings more than 20 years of software and services industry leadership to MetraTech. Scott founded MetraTech in 1998, after spending time at NetCentric, an early entrant in the business of cloud computing and where he created the industry’s first SGML/XML billing protocol. Prior to NetCentric, Scott was a Director at Cambridge Technology Partners, a pioneer in the delivery of client/server solutions for large enterprises. At CTP, he led the Fortune 100 and Fortune 500 companies. He has been named a Technology Pioneer by the World Economic Forum and is a Director of the Massachusetts Network Communications Council. Scott holds a bachelor’s degree in Electrical, Computer, and Systems Engineering from Harvard University.