The second part of a series of mobile payments posts I’m making to get ready for BarCampBankSF later on this month. The first part was a problem overview for the issues. This part is about the Fear Uncertainty and Doubt (FUD) that stand in the way of trying to get a global system going for moving money around.
I was going to hold off on this topic for a while, but then I ran across this gem of a report from our beloved US government explaining why mobile payments could destroy the world. The whole topic area right here just strikes me as backward, small minded, and at it’s base just really stupid. Here we have the potential for a fantastic system, uncoupling the concept of money from bits of paper and metal. Making it easy for people to do what they want with their money when they want. Being able to reach out and help friends and relatives in far away places instantly.
But instead of seeing the potential upside (not, potential upside, most of us don’t have the ability to do the things discussed in that report under the current set of services), instead what’s called out is the potential for abuse by a very small percentage of the population. I just don’t get that mentality at all. It’s like not allowing cars because people could get drunk and drive around in them. Or declaring that everyone has to walk around naked cause someone could hide weapons under their clothes. It’s just absurd. Why cripple everyone because you’re concerned about the behavior of a few? Apparently all you have to do is include the word “terrorism” and you can propose just about anything you want.
I personally don’t buy it at all. If you want to cut off the potential use of a system by terrorism, sure, by all means! I’m not going to stand in your way. But if you want to cripple a system that dictates what I can do with my money, how I can do it, and when I can do it, well then we have a bit of an issue. If you want to cut off terrorism do things that affect terrorists and money launderers. Inconveniencing everyone in order to do so is just lazy thinking. Unfortunately people have strong and irrational feelings about things like this cause they feel their safety is threatened (Surprise! You never really had safety, you’ve just become more aware of not having it), and any bit of absolutist thinking they can hold on to in order to make them feel better. Well darnit, that’s just going to have to do. Cutting off terrorism by cutting off their funding is one of those areas (Surprise! That’s not going to work either, probably won’t even slow it down).
Unfortunately what we’re working at here, at heart, is a fundamental change in the way people think about money. And like any major change, that really makes people nervous. Especially people who have a vested interest in the particular limitations, controls, and structures brought about by the incidental effects of the current system. People like governments and banks, who unfortunately are holding most of the cards in this game. In order to figure out a workable system we either need to work around the folks who would normally stand in our way, or convert them to our side. Most of the efforts that have come before are based around a third option of giving incentive to the existing folks and caving in to their restrictions. I don’t consider that option to be on the table, limiting a new system to make the players in the old system happy isn’t a path to progress in my opinion.
Converting the existing folks to our side seems like it could be pretty difficult. Hard to say though with the setup the way it is in mobile payments. With the carrier sitting in the middle of every significant transaction we might be able to play the banks against the carriers to come up with a system that works at scale to break open that market for the banks. But the banks have their own sets of issues. Working completely around the existing system might be the real option we have. Direct user to user payments with something only vaguely resembling a bank in the middle. Using alternative “payment” methods like trading prepaid minutes or prepaid messages. That gives us a bit of a foothold, but how does the regulation and legal arena look for schemes like that? For instance can I take $25 from someone in CA and at their request provide it to someone in NY for withdrawl? What needs to be reported and recorded in that case, and what base restrictions are there? If someone has good pointers please share them.
Mike,
The rest of the world is way ahead of the US on mobile payments as it is increasingly on many aspects of mobile “stuff” generally. Across the developing world people have been settling small debts through the exchange of top-up voucher numbers sent via SMS between them. MTN in South Africa already have a full banking service which runs totally on the phone and the M-Pesa service in Kenya (soon Afghanistan) is incredibly popular.
We at Mi-Pay (plug!) are also building full domestic and international money and airtime transfer services for operator groups in four continents using the existing pre-pay top up street sellers and vendors as financial service providers recycling their own cash balances from pre-pay to provide a cash-out service for remittances, government pension payments, micro-finance etc, etc. In fact, one of the major evolutions in mobile for the next five years or so will be the deployment of financial services through phone-based agent networks throughout the developing world…
You guys should get out more, ;-)
its a big World out there and increasingly the US is not where it’s at any more for mobile – “Necessity is the Mother of Invention” as someone once said.
All the best,
Simon
Simon
Hey Simon, thanks for the feedback, but it would be great if you read this before you just plugged what you’re doing. I’ll let it live though, cause your service sounds interesting. I know other areas have payment systems based on exchanging or cashing out prepaid minutes, that’s why I mentioned it. What I’m looking to do is figure out a way to do a global payments system, something that will work on the mobile web, to help accelerate the growth of that intrinsically global medium in an environment where most people are still focused on carrier boundaries. This excerpt from your website sounds like something in the right direction:
Mobile Payments – Our white label micro-payment and eMoney services allows customers to make instant purchase decisions using their mobile handset to buy goods and services or review previous transactions at any time, anywhere in the world.
The whole part of “white label” gets me a bit uneasy though, sounds like you’re trying to sell a platform to others to use? Why not run a global system anyone can hook into? These phone based networks you mention, online or offline payments?
To me the real advance would seem to be more through platformless digital cash. Allowing arbitrary exchanges between arbitrary users. Not yet another platform that someone is trying to get everyone to hook into. Unless of course we’re able to provide some kind of OpenID or OAuth inspired payment selection endpoint allowing any merchant to use any backend payment provider at the user’s direction.
The Mi-Pay stuff looks somewhat interesting. But to me it sounds a bit like you’re selling the utopian vision of broad mobile payments, but really just looking to get people to integrate into a different platform. Please let me know if I’m wrong.
What I would like is something like a Google Checkout Mobile where when I’m in a coffee shop, I can just enter a vendor code (maybe cut-paste something over wifi or bluetooth, then bookmark it) and the amount, and they get immediate notification and transfer. I say Google Checkout because I don’t like the “fax your electric bill at 2am” resolution of problems at PayPal, but already have GC.
There are also systems using blind signature cryptographic methods to send numbers representing coins, and it would be easily doable but require a clearinghouse server. Anything like this would require a lot of customers and vendors to adopt and trust it first, so it is unlikely to happen.
Mike,
One of my key points was that in the “West” mobile payments are a “nice to have” in many ways. There are always other ways to pay and you have to get over the innate conservatism regarding payment methods amongst the vast majority of consumers. It took 40 years for Europe to “get” payment cards and another 10-12 years for debit cards to have wide acceptance. Another key requirement is developing an inherent trust between all parties in the proposed payment channel. In my view there simply isn’t a driving need for mobile payments that is sufficient enough to change the status quo other than in certain niche areas. (Note to self – get that web page rewritten!)
Question – Would PayPal have succeeded without the disruptive model of eBay to drive it? Even they with their Uber Brand can’t get much traction out of mobile payments…
In the developing World however, mobile payments could be a critical factor in overall economic development because there is not much else for initiating payments beyond your cash radius (about 20 miles or as far as you can walk in a day). That’s where mobile payments will take off – But its critical that there is a strong cash element involved as there is a healthy distrust of technology…
We do white label mobile payments largely with operators 1/ Because they want to push their own brands. 2/ They don’t get risk management and payment business processes very well, and 3/ We don’t have a spare £30M to push our own brand uphill like a rock!!
Simon
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