Economists have a famous saying .. never make a prediction that you don’t plan to outlive. Turns out it’s pretty good advice, especially when it comes to payments stuff.
I was asked to give a presentation yesterday about igniting mobile payments. I decided to focus part of my presentation on the “myth” that mobile payments is “booming” everywhere in the world and the U.S. is sucking wind and better get with the program and fast. I’ll save the details associated with the whole storyline for another post, but I wanted to provide you with a really interesting data point that illustrates the danger of making predictions and, in this case, the impact on igniting mobile payments.
This slide does something that I have never seen done before – it actually puts on one page all of the various predictions made by the analysts about NFC adoption going back to 2009. (Shout out to the Market Platform Dynamics (MPD) team for puling this together). It tells an interesting story.
Every year that a new prediction was made by another analyst, the starting point was adjusted lower. Like by a lot. Until Gartner’s prediction in 2013, that sort of went unnoticed and was never called out. Now, these analysts were basing their forecasts on other people’s forecasts of things like terminal shipments and handset shipments, and they were supported by the massive hype associated with the “inevitability” of NFC-based payments at the point of sale – ignoring the reality that only a very small portion of merchants in most countries had installed contactless terminals, consumers had shown very little interest in using contactless cards and/or phones (most don’t have them), which led to merchants having even less interest in investing in and/or activating those terminals.
It is that which even now perpetuates the myth that mobile payments is “exploding” everywhere in the world but the U.S. – the only major market without a massive number of NFC trials – and that if the U.S. only had NFC, we’d be rolling around in mobile payments adoption like there was no tomorrow.
Turns out, that with a few exceptions – Canada, Poland, to name two – NFC payments adoption outside of specific use cases such as transit is pretty anemic, even in places like Japan and Korea where the technology has been in place for some time.
So, the point of the slide – and that part of the presentation – wasn’t to criticize the analysts or to continue to beat up on NFC. Instead, it was to emphasize the risks of buying into the “hype” about what is supposed to be “hot” in payments without acknowledging some of the basics associated with how to actually achieve “ignition” in mobile payments – or any platform ecosystem.
The prevailing wisdom associated with NFC at the time was as a technology that enabled a pure payments substitute – phones at the physical point of sale and not cards. We’ve since learned that adding “value” well beyond payments – in fact, value that even pushes payments to the background – is what will ignite mobile commerce.
While we’re starting to see some of those solutions begin to emerge now, the industry has lost a whole lot of time – something like 9 years – because it never stepped back to question the wisdom of the predictions that were driving hundreds of pilots and hundreds of millions of dollars of investment but not delivering the reality behind the hype.
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