Citigroup.com Homepage
Technology & Innovation

Upwardly Mobile II

A Long and Winding Road for Mobile Payments - Eight Crucial Questions, Answered
Article  •  November 27, 2012  •  Contributors
Citi GPS
Mobile Payments has been dubbed the Future of Money and the conventional wisdom is that this is how we will transact in the years to come. When we analyzed the global Mobile Payments opportunity in our first  "Citi GPS: UPWARDLY MOBILE " report back in March 2012, we provided a good description of a variety of topics related to Mobile Payments. The past six months has been heavy with news flow indicating that there are now wider choices than before in Mobile Payment and these announcements have also given us better clarity on what can and cannot work. Subsequently, we’ve found that there is a need to address questions that go to the heart of what is changing within Payments. In this report, we focus on eight questions that address the issues of business model evolution, technology and adoption:
Share on LinkedIn
Share on Twitter
Copy Link
Print
Share with Email
Download attachments
ContactUs

 

1. Processing "Rails" and Transactions – Do Mobile Payments alter the traditional 4-Party payments system? If yes how?

 

2. Incumbents and Their Actions – What are incumbent card networks doing to adapt to the rapid changes brought by Mobile Payments?

 

3. Targeted Offers and Data Ownership – How will the adjacent "Targeted Offers" market develop? Who owns the underlying data?

 

4. Ecosystem Evolution – What will the Mobile Payments ecosystem look like?

 

5. Technology Choice and Timeframe – Which technology is likely to win and become the global standard? Will it be the early leader, NFC (Near-Field Communications) or will cloud-based or other solutions win? When will the infrastructure be in place for widespread Mobile Payments?

 

6. Global Standards and Regulation – Will a global Mobile Payment standard emerge to address regulation, security and privacy concerns?

 

7. Mobile Wallet Attributes – What are the desirable attributes of a Mobile Wallet?

 

8. The Holy Grail: Consumer Adoption – What will drive consumer adoption?


We find most importantly, that mobile payments could simplify and alter some elements of the traditional four-party payments system as information and interaction increase in importance, versus the actual payment transaction itself. The type and timing of technology is still not clear but what is clear is that in the last 6 months, new and credible non-NFC solutions have emerged. Infrastructure must be upgraded to enable Mobile Payments for any technology that becomes the global standard and the timeframe will be technology dependent. Merchants may very well wait until there is more clarity on technology before making investments towards adoption. Finally, we believe consumer adoption will depend on the presence of a “killer app” – an app that is simple for both consumers to adopt and use and is widely available.

Although we are now able to hazard a guess at the lay-of-the-land for a future Mobile Payments ecosystem, we still look for a multi-year path to reasonably widespread adoption. It may be a long and winding road, but every day brings us closer to reality.

More about Technology & Innovation

Related Stories

Citi GPS
Technology & Innovation

Bank X

Is your bank giving you the best customer experience? Has it embraced the digital age like other services you deal with daily? A substantial number of new entrants into the banking sector think that answer is no and that they can provide a new banking model using technology and digital channels to deliver a better digital customer experience.
Citi GPS
Technology & Innovation

Upwardly Mobile III

On most any workday morning, we take a lot of things for granted. We assume the alarm clock will ring, the water in the shower will be hot, the car will start, the train will show up on time, the kids will call us at least once before they get on the school bus, we’ll arrive at the right location for our first marketing meeting and, if we’re lucky, might even have gotten to a new level on Candy Crush before we get there. In short, we’re taking it for granted how much of our eventful morning we owe to Mobility — smart electric meters, smart appliances, Connected Cars, rail safety systems, smartphones, navigation, and online gaming — all made possible because of the dramatic growth in the use of mobile computing and connectivity. And this is just the tip of the iceberg. Paying for your Starbucks with your smartphone while reading a news report on a tablet after your Connected Car helped you avoid a traffic jam is a more obvious use of mobile, but with the integration of Mobility growing exponentially and across a many sectors, it will increasingly become the base of our daily living.
Citi GPS
Technology & Innovation

Upwardly Mobile

In the good old days, your office couldn't reach you 24x7, Apples and Blackberries were found at fruit stands and you only came across an Android when you relaxed with a science fiction novel. Also, in the good old days, people drove in circles looking for an address or a payphone, they stood in line at the bank for every financial transaction and they ran from store to store searching for the best price. Today in most developed markets, you can not only place a call but with a couple of clicks on a mobile phone you can pay a bill, send money to a friend, search for the best bargain, donate money to charity and pay for practically anything. In emerging markets, consumers are finally being included in the formal financial system. Workers who are employed anywhere in the world can now text their wages back to family members at home and no longer have to travel hours at a time to pay utility bills.

GPS

Providing unique thought leadership tackling the key opportunities and challenges of the 21st century.
Learn more
Get in Touch

Sign up to receive the latest from Citi.