For Mainstream Adoption, Mobile Payments Require Consumer Trust - and a Compelling Experience
Earlier this month, The Clearing House announced that it would pilot an "industry-wide dynamic credentialing solution" to improve the safety and soundness of digital payments. According to the announcement, The Clearing House is partnering with its member institutions to create a "Secure Cloud" that protects mobile payments at the point of sale by replacing the consumer's account information with a randomly generated temporary account number. The purpose behind the initiative is to eliminate consumer concerns about the safety and soundness of digital payments, including those made on mobile devices.
… consumers need to have trust in the security of mobile payments. Any solution that protects against fraud is fundamental to its long-term success.
This announcement didn't get a lot of media attention, but I think it's an important - and necessary - development for several reasons. First, it's great to see collaboration among financial institutions. By taking steps to secure the mobile payments ecosystem, they are bidding to be at the center of the rapidly innovating mobile payment and mobile wallet landscape. Second, while there's more to be learned, the cloud infrastructure for payments processing is intriguing and I anticipate further growth in this area. Finally, and perhaps most significantly, consumers need to have trust in the security of mobile payments. Any solution that protects against fraud is fundamental to its long-term success.
However, in order to drive adoption of mobile payments we must address not only security, but also the current lack of a compelling experience at the point-of-sale. Right now, outside of a few closed loop wallets from merchants like Starbucks, mobile payment options don't provide a substantially better solution than pulling out a card and swiping it at a terminal. Until that happens, mobile wallets will continue to be in large part a solution looking for a problem. I applaud the effort to secure the backend payments process as a much-needed step in moving mobile payment into the mainstream. Let's not stop there. As an industry, we should continue to promote that same level of innovation and collaboration to transform the experience for consumers and merchants at the point-of-sale.