Mobile Payments in the Wild

Back in June I wrote a post exploring the mobile payments sector – or what I called the next billion dollar market.

In the post I used Mobile Lime as an example of a company who were getting it wrong, in my opinion. In fact, I concluded “Mobile Lime, in the nicest possible way; Change or Die” , so I wasn’t exactly sitting on the fence when I wrote it. I was therefore very interested to read an article on Seattle PI which tested Mobile Lime in the wild, in the Boston area.

Would my theories and experiences be validated?

The first and most important point about any mobile payment system is what I called Buckley’s First Law of Mobile Payments:

If the transaction process is any more complicated than using a credit card or cash, it will never succeed.

Note the “never” part.

Over to Seattle PI:

When you’re ready to buy something, you pull out the cell phone and call MobileLime. An automated voice greets you by name. You key in your four-digit PIN followed by the location code, a short number posted in the store. Then you give the cashier the last four digits of your cell number.

It’s pretty fast – though with all those steps it’s slower than cash, unless you begin the keypunching even before the clerk begins to tally your order.

90% of the success comes down to usability. This is not a good system.

The next point I made, which is kind of related, is staff training. It’s an area that is always overlooked and in fairness, almost impossible to tackle effectively. The retail industry is notorious for its high turnover and seasonal and part-time workers, so even if you try to visit every single store and every single staff member, you’re still going to miss someone. This means that your service has to be simple and intuitive to use for the staff, as well as the user.

Back to Seattle PI:

In my first attempt with it, the sales attendant at KaBloom insisted I couldn’t use MobileLime to buy things. She thought it was merely a way to record my purchases so KaBloom could grant me rewards as my spending increased. Paying with the phone? That would leave her register short at the end of the day, she said.

I persisted, and tried to explain, but she stood her ground, and quickly the situation became ridiculous. Someone behind me was waiting. Unwilling to make a flower-buying commuter late for her train, I dropped my pleas, plunked down cash, and left.


Mobile Lime also suffer from the classic chicken and egg syndrome that I wrote about. You can’t get enough merchants on board until you can show that you have lots of potential users. And users aren’t interested until they know they can use the system with lots of merchants.

Unless a payment system can crack this classic conundrum, they’ll never succeed, even if the usability is sorted out. This is not a nice-to-have in the business plan, but essential to success.

I know how I’d do it. How would you?

On the plus side, Mobile Lime have built into their service a merchant discount and loyalty tool:

Most attractive are the discounts many MobileLime merchants offer in exchange for being able to track your spending. I got two freshly made smoothies for a total of just $1.09 thanks to the combination of two such deals.

This gives the potential user a reason to use Mobile Lime, though I’m not convinced it’s a strong enough reason to overcome the violation of Buckley’s Law. I’d guess that many of these discounts are funded by Mobile Lime themselves actually, though there’s nothing wrong with that, as a short term marketing cost.

Longer term, someone has to create, organise and co-ordinate all the stores’ local marketing programmes and that’ll become a problem in itself. My experience suggests that retailers will rely on Mobile Lime to do the running in the next 3 – 5 years, which will also be difficult to scale. If users are using Mobile Lime primarily because of the offers and the offers don’t happen… see the problem.

The other potential glitch was that the system itself didn’t work several times, which the company claimed was down to switching computer systems for 20 minutes. Now, please don’t get me wrong – I have worked with technology for many years and I know that systems crash, upgrades must happen and things do go wrong. I also know that you should avoid live demo’s.

But if you’ve got a live payment system, you need back up and contingency to make sure that this simply can’t happen. Imagine the chaos if this were a popular payment method and the system went down on a busy Saturday in December? I also think that loss of service on the very day that a journo was testing it and in a 20 minute window when he was trying to make a payment was either incredibly unlucky or symptomatic of a bigger problem than they are admitting to, but let’s give them the benefit of the doubt.

In terms of results, so far Mobile Lime have signed up 80 merchants (most of whom seem pretty small) and 10,000 users. You could argue that this is just a test phase and in fact, they claim to be about to increase this “dramatically” with several nationwide additions to the merchant network. But I guess they would say that, wouldn’t they?

However, unless the company can improve the transaction complexity and time, I have to say I’d be surprised if a large offline retailer would take this on. Their Ops people would never approve something that slows down shop throughput significantly.

So, is there anything here to make me move away from my “Change or Die” gauntlet? What do you think?

In fairness to Mobile Lime, this is an insanely difficult product offering to get right. But the prize for the winner in mobile payments is more than worth the effort.

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