Three years ago, I would sit at PayPal with my other mobile payments colleagues and we would brainstorm ways we thought users would use PayPal on the phone. We would think up scenarios such as donations, queue busting, and even pizza delivery with a simple text message. We even developed elaborate ways to score which use cases we thought would be most important so that we could focus our efforts in those directions. Sound reasonable? We thought so. For two years, I led PayPal Mobile’s Business Development efforts in North America, closing deals with mobile operators, platform providers, and merchants to enable PayPal on the phone…. But there was one major problem:
There really wasn’t a need.
Yes, I said it…. No real need, at least, not with our banked PayPal customer segment.
Sure, people will buy eBay items using their phone and iPhone users may even send each other some money. Teens will buy digital content and bill it to the phone… But let’s face it – for the majority of us with 5.4 cards in our wallets, how do mobile payments significantly improve our lives?
Recently, someone asked on a LinkedIn Group how to persuade US customers to use mobile payments.
My response: You’re asking the wrong question. The real question needs to be: Where’s the REAL need?
Do you get mugged when you walk down the street because you’re holding bucket loads of cash on pay day? Is your entire life savings gone because of flooding that has wiped out your cash under your mattress? Do you have to give cash to someone you don’t know who is going to get on a truck and supposedly get it to your loved ones in 3 days? Can you not get to a bank because there are no branches within 50 miles of your home and you have no car? No? Your money’s “safe” in a bank and you have access to it? You have access to your money by swiping a card in a market where nearly all merchants will accept it? Then the system’s not broken. Go fix it where it is.
OK, OK… But what about the U.S.?
There are segments of the population in the US who actually have surprisingly similar ways of conducting their finances as those in emerging markets. (By the way, don’t think that some people in New Orleans didn’t lose their savings under their mattresses!) However, the reasons why they don’t use bank accounts and may need mobile payments may be different (opt out of bank vs. lack of opportunity to participate.) There is a significant mobile payments opportunity for this set of the population that is heavily cash-dependent…. And, by the way, they do have mobile phones.
People change payments behavior VERY rarely unless there is a SIGNIFICANT reason to do so. Being just slighty better than the next alternative will not change the dial (Similar to Roman times, we still use coins and even pennies in the US!). If you want to address a need, sniff out where cash is used.
…the new PayPal bump is sexy and all, but how does it change our lives?