Mobile payments : what we can learn from the past

Abstract

Over the last decade, there has been a proliferation of mobile payments systems (MPS). Close to 150 MPS currently exist in the world according to the Bank for International Settlement records (BIS). Mobile payments (MP) markets are at different stages of development depending on countries. However, most of them are going through their embryonic or early phases. According to the theory, at this fluid stage, where no dominant design has emerged, it is nearly impossible to predict industry evolution. This paper tests the hypothesis that (i) because the MP industry is a path dependent system rather than a hysteresis system whose state depends on their immediate history, (ii) we can actually rely on accumulated experiences (success and failures) to narrow markets options in terms of dominant players and speed of adoption. In this paper, we elaborate a classification matrix of payment services and using the Weil-Utterback system dynamic model of the diffusion of innovation we analyze the main loops at play in US, Europe and Japan. In the process we provide numerous examples of MPS and several case studies. The key take aways of our analysis are that (i) incumbents are likely to dominate the offering of mobile payments services. (ii) in the next three to five years, US rate of adoption is likely to be faster than the European one.