Next week I’ll be speaking at the 3rd Mobile Commerce Summit Asia in Manila. While the focus of the summit is obviously on mobile commerce, my presentation focuses on mobile commerce drivers, particularly in the 1st world. Those drivers are clearly increased prevalence of smart phones, and growth in mobile social networks, which will lead to increased use of the mobile phone as a payment device. The dynamics and drivers for mobile commerce in the 3rd world, particularly Africa, are completely different due to lack of infrastructure, established banking systems, trust in institutions, and not to mention the relatively low penetration of smart phones due to their obvious high cost. In Africa, established distribution networks are the key to successful mobile payment uptake.
I was involved in a premature foray into Near Field Communication (NFC) mobile payment initiatives with an Asia-based start up beginning in 2004 . After designing and building complex payment systems based on this still non-ubiquitous technology, we changed course and we diversified our product offering into mobile advertising services that integrated with existing Chinese mobile social networks. Hindsight is always 20/20, but clearly it makes more sense to bring services to communities of consumers that already exist, rather than building complex systems based on as of yet non-standardized technologies. Every few years since 2004, Gartner has predicted that NFC will be a major mobile technology, but these predictions have consistently proven not to be true (try buying an NFC mobile phone at your local mobile phone shop).
Thus, I believe that the experience we had in China with mobile advertising services will parallel what will occur in the developed world with mobile commerce. Clearly increased use of mobile social networks will drive mobile payment services in the developed world. There has long been a rumored “Facebook Wallet”, and with new mobile applications like Foursquare and innovative social gaming payment platforms like Kwedit, mobile commerce adoption in the first world will not be driven by specialized and expensive hardware systems like NFC, but by existing social networks that enable mobile payment services for their members.
I’m excited to hear in Manila exactly how the NFC landscape is shaping up as I stopped following NFC closely in 2007. I’m also looking forward to engaging in discussions with other panelists about mobile payment services driven by specific technologies that have not reached critical mass of adoption where cost of customer acquisition is high (e.g. NFC, and the cost of creating an embedding an NFC chip in mobile phones) vs. services driven by existing technologies where customer acquisition costs are low and a critical mass network of users already exists.