Mobile Payments are Hard to do Right

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25 January 2011
Bart Narter
In my younger days as a product manager in Silicon Valley, my engineering team often told me that I can induce bugs simply by looking at the software. The system they built would always work perfectly until I attempted to use it and then, voila, when it was time to show it to me, it would crash or behave strangely. It would appear that I haven't lost the touch. Starbucks' mobile payment app was no match for my deadly touch. I have had similar impacts on Chase's mobile RDC. I downloaded the Starbuck's new mobile payment app and it worked great. I could load my card, get my balance, view reward status. It's only when I tried to pay using the app that I encountered failure. [caption id="attachment_2002" align="aligncenter" width="207" caption="The bar code shows but doesn't work"][/caption] I was able to get the bar code to come up, as shown below, but when the cashier went to scan the code it simply didn't work. She rescanned multiple times at multiple angles to the same result. Knowing that leading edge equals bleeding edge, I had back up payment ready. For mobile payments to work right, a payment provider needs to be able to 1. Provision the mobile device with secure account information. 2. Enable the mobile device to transmit the secure information to a reader. 3. Have the reader be able to understand the information transmitted. 4. Have the reader transmit this information to a payment network for approval. We made it to step two, but failed at step 3 in this particular case. An end user doesn't care. The payment failed. While the mag stripe on a card is not very secure, it does work pretty darn well. I have a better than 99.9% success rate with this technology, and I expect any technology that replaces it to do at least as well. With both Chase's mobile RDC and Starbucks mobile app my success rate has been 0%. My advice to mobile payment vendors: Please don't roll out products until you have at least two nines (99%) of reliability. You're competing against mature and reliable technologies and will destroy the image of mobile payments before they launch. In the world of social media, word gets out fast. The ratings for the app on iTunes: One Star: It doesn't work. Testing involves using the software on a variety of platforms iPhone 3G, 3GS, 4, any number of Android phones and RIM phones. The list goes on. This gets complicated and difficult if you want to deliver even two nines of reliability. Be prepared to invest or outsource.


  • This scenario seems to support the argument in favor of "rip-off and duplicate." There are many in the financial industry who bemoan the lack of innovation, but doing R&D right is difficult — it takes time, talent, focus, patience, money and a propensity for risk/failure. It's often way easier and way cheaper to let other, more courageous firms beta-test ideas, then steal the ideas that work or hire a third-party supplier.

  • [...] to use QR (Quick Response) codes in financial services and payments context. Celent has already blogged about how the code can be used to buy a Starbucks coffee. Last week, Smart Transactions launched [...]

  • There are lots of moving pieces in the payments world and getting them all correct is difficult. First mover advantages can be powerful, but in mature markets fast-follower may be equally valid.

Insight details

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Asia-Pacific, EMEA, LATAM, North America