Published : 8 years ago, on 17/01/2017

Mobile payments have been hailed as the second coming for quite some time now. But in reality, what’s being claimed so far is nothing more than two basic evolutions of an existing payments system.

On the one hand, people are simply accessing and shopping on websites using a mobile device, like their phones or tablets, rather than their desktops, so while payment is happening on mobile, it really is just another form of e-commerce.

Dennis Jones

On the other hand, many customers are using ‘revolutionary’ contactless payments to speed up transactions and allow consumers to tap and go, whether on public transport or in the supermarket. Mobile wallets seem to be multiplying, with the promise of storing all payment and loyalty cards in one, handy wireless-enabled app.

But beneath the hype, there’s a real change going on. And it’s being led by taxi drivers.

The real mobile commerce

The magic of mobile commerce lies ‘in-app’, and Uber is leading the charge. It’s a truly mobile model, not e-commerce that just happens to take place on a mobile phone.

First, Uber revolutionised the taxi industry by exponentially improving the user experience for both passengers and drivers. The ability of the app to match supply and demand in real-time, plus the simplicity and convenience of booking a ride directly through the app, irrespective of location or time of day, has made grabbing a ride with Uber a no-brainer.

Critically, Uber moved the whole end to end user experience to its apps, including payments, again exponentially improving the experience for both passenger and driver, freeing both from having to carry cash. And for the passenger, the convenience is further improved as they never even have to get their card out of their pockets, with payments guaranteed, price agreed in advance, debited after the trip, all done in the background through the app.

All in all, by removing the friction of paying to get from A to B, Uber has also helped create a user experience and business and payment model that has the power to change the way we transact for good.

Getting rid of friction has been vital to disruptive brands’ success. Amazon stores multiple delivery addresses, payment details and is perpetually at the forefront of getting your stuff to you faster than anyone else. Yesterday, next day delivery;tomorrow, drones. In the same way as Amazon fixed delivery issues, even just a little bit, frictionless payments and user experiences create that little magic moment that captures the imagination of the consumer.

Magic moments spread. They get discussed at the dinner table; friends share apps with friends.

And when you can’t access that magic moment, you begin to crave it, powerfully. Just ask anyone who’s taken an Uber in London but doesn’t have it where they live. Open a customer’s eyes to what’s possible and instantly they can’t understand why every company isn’t doing it. There’s no going back for these people – Uber has suddenly made the simple job of booking a minicab a really laborious task.

Consumer desire spreads like a virus, destroying the weak

The burning need for a better delivery experience allowed Amazon to corner the market with its core offering of books and quickly hoover up all manner of sectors from electronics to fashion and most recently, fresh food. It’s increasingly clear that if you fail to live up to consumers’ Amazonised expectations, you’re toast.

What Amazon did for delivery, Uber is doing for in-app payments. And time is of the essence.

Uber launched in a single area of San Francisco in 2010. It hit $1bn in revenues by 2013. In 2015, that had risen to $6bn and was no longer the preserve of early adopters. Uber is now mainstream and already consumer demand is pushing the company into other areas such as UberBoat and UberEats.

To give you an idea of how fast you’ve got to act to meet consumers’ ‘Uberised’ expectations, we can compare both Amazon and Uber against Everett Rogers’ ‘diffusion of innovations’ theory. Amazon and Uber spent roughly the same amount of time – five years – attracting only customers from the ‘innovators’ group. Five years to build a customer base of start-up oriented, tech savvy young consumers, largely from Silicon Valley.

Amazon then spent six years in the ‘early adopters’ phase before going mainstream by hitting the ‘early majority’. Early adopters are basically the same as innovators but a much larger group. Still young, still tech savvy and still only a fraction of the population.

Uber, on the other hand, took just two years. Just a third of the time Amazon needed to go global.

2017- the year of app payments

Whereas Amazon’s competitors had six years to catch up with Amazon’s way of thinking (and we all know what happened to those that didn’t), Uber has presented the market with barely two. And those are already up.

Bringing in in-app payments is no small thing. It has the potential to usher in wholesale organisational change. When one part of the business becomes seamless, expectations rise across the board.

The requirements of building in-app payments and the consequences it can have for a business already trying to keep driving forward in a pressured, multichannel universe means that it’s a rare organisation that can pull out all the stops internally to get up and running in time. That the payments trend is moving at lightspeed only adds to the pressure.

Organisations are increasingly looking outside to get these new operations off the ground securely and competently. Mimicking the best-in-class consumer experiences of the trailblazers and using specialists such as Cybersource, in the days of early e-commerce, and Judopay, for in-app payments today, lend the familiarity and security that are otherwise key barriers to consumer adoption.

Already, Uber-style companies are targeting customers where it matters – in convenience. Eleso^[1] is an app that allows drivers to pull up to a petrol station, fill up and drive off. Behaviour that once would have earned you a following of the boys in blue now uses automatic number plate recognition to debit your card and top up your loyalty points.

By 2018, we’ll all be loving smartphone ordering at McDonald’s. No more waiting in line behind a kids’ birthday party, no more impatient idling in the Drive Thru as someone dithers over a wrap or a Big Mac^[2].

E-commerce took off because it gave us more choices, m-commerce succeeds because it brings these choices closer. App commerce is going to take over both by making it faster and more convenient than ever before.

If you still consider a mobile responsive website and credit card autofill the height of customer experience sophistication, then you truly risk going the way of the dinosaurs. The better way will always win, whether you like it or not.

^[1] https://www.siliconrepublic.com/start-ups/hate-queueing-for-petrol-theres-an-app-for-that

^[2] http://metro.co.uk/2016/11/05/mcdonalds-is-introducing-smartphone-ordering-in-the-uk-6236739/