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Mobile Payments and Beyond

By: Michael Scheibach

Forbes magazine captured it all in one headline: “Mobile Is the Big Winner This Holiday Season.” If there was any doubt about the power of mobile, it is gone. PayPal, the global payments powerhouse, reported mobile payments on Black Friday up nearly 200 percent over the year prior. According to an IBM report, mobile sales hit 16 percent, versus 9.8 percent from the previous year. And Braintree, which works with mobile and online businesses, reported more than a 50 percent increase in consumers using mobile devices to make purchases.

With the majority of cell phone users now equipped with smartphones, the demand for more mobile applications is pushing the technology envelope not only for retailers and payments processors, but also for financial institutions, which must keep pace to maintain their role in the world of mobile transactions. Bank of America and U.S. Bank have already staked their claims in the new payments marketplace.

Bank of America has introduced Mobile Pay on Demand, a solution designed specifically for small businesses that turns a client’s smartphone or iPad into a mobile point-of-sale terminal. Mobile Pay on Demand includes a free mobile app, free secure card reader and no monthly or annual fees. The solution translates into next-day access to funds even when payments are accepted outside of normal business hours — a significant feature for small businesses needing improved cash flow.

U.S. Bank has partnered with Mitek Systems to offer Mitek’s Mobile Photo Bill Pay to its customers. Mobile Photo Bill Pay allows smartphone and tablet users to take a picture of a paper bill, from which the technology automatically extracts relevant information and auto-populates the fields required to make a mobile payment.

“Customers expect banks to at least offer mobile services, and we think it will become the way people bank in the future,” said Jim DeBello, president and CEO, Mitek Systems. “I expect that the dramatic growth in the adoption of mobile banking is nowhere near leveling off. The numbers will only continue to grow exponentially in the next five years, especially as smartphone adoption rises across all demographics.”

No one disputes the future of mobile banking and mobile payments. The Federal Reserve reports that 43 percent of Americans will become mobile banking users by the end of 2013; Chadwick Martin Bailey, a market research firm, reports that more than 40 percent of smartphone users have made purchases from their mobile phones; and 80 percent of U.S. retailers plan to invest in mobile commerce this year, according to the e-tailing group, an ecommerce consultant.

So what’s next? DeBello believes mobile devices are going beyond banking and payments into the realm of insurance quotes and more. Mitek’s Mobile Imaging Platform, for example, transforms a mobile device not only into an imaging system for bills, but also for receipts, VINs, driver’s licenses, insurance cards and other documents. It features field-level data extraction services on nearly any document, and document identification, signature validation, context-based OCR and column/table ID.
It has been a rapid evolution from mobile banking to mobile bill pay. And we are not even close to the mobile tipping point. For community financial institutions, this is the time for carefully thought-out strategic planning. They should envision where they will be in three years, in five years; and then they must make the necessary investments now that will help them reach their long-range objectives.

Michael Scheibach is executive editor of BankNews.

Copyright (c) January 2013 by BankNews Media