Archive for August, 2015|Monthly archive page

Mobile payments: maybe person-to-person is the way to go?

This post first appeared here but I made an update.

Every year seems to be the ‘year of mobile payments’ and 2015 is no exception. See hereherehere and here for this year’s crop of predictions.

Every pundit’s predictions seem to coalesce around two points:

1. Smartphones are more ubiquitous than ever

2. There have been small early wins for Apple Pay and their competitors PayPal in-store, Alipay, Coin, Current C, etc.

However, the ‘year of mobile payments’ has been predicted from as far back as 2008 and all the predictions seem to miss a fundamental point. The act of taking out a credit card or debit card and waving it in front of a machine is just as convenient, if not more so, than whipping out your phone, finding the right app, and waving it in front of a machine. The user experience is the same.

But here’s a market where mobile payments might catch on – person-to-person payments.

Your roommate’s name is on the utility bills. You can write a cheque to pay your share, which requires your roommate to remember to deposit into their bank account. You could send an email transfer, which requires effort to fill out and effort on your roommate’s part to receive. Or, you could send the money via mobile payment in one fell swoop while sitting in your living room.

You need to collect the team fees for your rec league soccer team. You can have everyone give you cheques or cash at the first game, or chase down individual email money transfers. Or, you can collect them all at once via mobile-to-mobile payment after you start the year 1-0.

You’re at a restaurant with a group of friends that won’t offer separate bills. You can all scrounge for cash, or put it all on one person’s credit card and have the others send that person a mobile payment on the spot.

As people continue to move away from cash and towards card-based payment, person-to-person payments are the likely growth area for mobile payment systems. Right now you can make person-to-person payments using email money transfer, PayPal Mobile, or a person-to-person payment app like Venmo (which is owned by PayPal), each with its own user experience quirks and fees. I’m not going to predict which technology solution will win but I do think we will eventually see a surge in mobile payments, just not necessarily by consumers to retailers in their stores.


OK I’ve thought of two user experiences where paying by phone is more convenient than your credit card:

  1. Parking: Here paying by cell phone takes away the inconvenience of having to walk to the machine get a ticket printed then walk back to your car to stick it on the dash. Mobile payments also allows you to extend the parking time without having to rush back to the car and put money into the machine.
  2. Uber: Self-explanatory.