It seems that every time you read breathless, obsequious coverage of the so-called mobile payments revolution that is supposedly taking place right now — despite all evidence to the contrary in our day-to-day lives (where I have literally never seen anyone ever pay for anything with a phone) — journalists tend to identify cash as the inevitable loser in a battle that is largely imagined. It’s certainly provocative to depict greenbacks being digitized into oblivion, as Fortune magazine did on its cover recently, or folded into an origami Stegosaurus, as David Wolman’s The End of Money does on its cover. But by doing so, they frame the debate in a strange fashion — why must mobile and cash be at odds? Why not mobile and plastic?
Finally someone (who, unlike me, feels positively about mobile payments) has identified its true enemy: plastic. Writing in Mobile Commerce Daily, Rimma Kats interviews Nick Holland, a senior analyst at Yankee Group, a mobile payments consultancy based in Boston. Naturally, Holland is predisposed to enthusiasm about the industry, but he also manages to sound more rational than most journalists who cover the space.
In his words, via Mobile Commerce Daily:
“Digital content trumps physical media every time due to cost reduction and the ability to deliver content immediately,” he said. “Digital mobile payments will mean the demise of credit cards, but the death will be a very long, slow one considering how slowly the banking industry moves and how entrenched plastic cards are as a means of paying.
“We still have magnetic stripe cards in the United States – a 50-year-old technology. Conceivably it is a decade or more before we start to see credit cards get trumped by mobile. A more interesting question is ‘are mobile payments the demise of credit card networks.’”
It’s hard to make a magazine cover demonstrating the slow, decade-long dissolution of the duopolistic credit card networks — obliterating $100 bills is far more visually stimulating. And while Holland’s comparison between mobile and digital media is somewhat unfair — credit cards aren’t burdensome compared to smartphones in the same way a 48 CD leather case packed to the gills with liner notes and discs is burdensome when compared to an iPod (in fact one could easily argue that credit cards are much smaller, lighter and more dependable than an Android phone) — the question he ends with is far more fascinating than the cashless future nonsense that typically guides discussions of mobile payments.
By looking at mobile as a threat to plastic instead of cash, its disruptive potential becomes much more apparent. Credit cards cost merchants lots of money in interchange payments to accept, and any convenience they offer confer to consumers. Mobile could potentially help merchants circumvent the interchange racket and offer a new marketing channel. Disruption — real or imagined — is the golden calf of Silicon Valley these days and cash isn’t the inefficient, hulking, greedy dinosaur in the payments space that our geek warriors must do battle with: it’s credit card companies. It’s hard to understand why this isn’t a more popular line of reasoning among geeks, I mean don’t they absolutely adore Fight Club?: a movie that ends with credit card companies’ office buildings being blown to smithereens.
Mobile payments, should they be truly transformative, will make people and businesses more free from the expensive and inefficient system currently in place. They won’t do away with cash, however, and to cheerlead that process is at best silly, and at worst kind of creepy. Do you really want every dollar you ever spend anywhere to be totally traceable? What ever happened to the obsession with privacy and freedom that characterizes so much tech banter? Why has this fallen by the wayside in the discussion about mobile payments?
As the mobile payments industry grows up, and is put to use by actual consumers in the real world on a large scale, we’ll see which method of payment is forced to take a backseat. Doesn’t it seem reasonable that the one that puts people in debt and charges all sorts of outrageous fees to all parties involved might get the boot? We hope so.