The Emerging Wave of Mobile Payments – By Moin Moinuddin, industry architect, Microsoft


Mobile phones are evolving rapidly and have become almost as powerful as personal computers of some years back. They are everywhere and they are connecting people like never before. According to a recent analyst report, India and China combined will soon have 400+ million mobile phone users. This mass proliferation of mobile technology across the globe opens up huge opportunities. Mobile phones can serve not only as devices for communication but also for many other applications, such as identity, payment, loyalty, access control, transportation, service and information discovery, health care, and many more. Here, I share my opinion of where I think the industry is heading and what the mobile world will look like in near future.

Credit cards have remained the same since their creation in the ’40s and ’50s. Fifty years back when the first credit cards came into circulation they had magnetic swipe strips, and to this day they continue to be in the same format. However, there are new driving forces that are bound to make significant impact on how the card looks, gets provisioned, and completes the transaction. We also have many new ways in which to shop and acquire goods. In addition, changes in society and the emerging technologies have the potential to change the payment landscape permanently

Business Model

The availability of broadband everywhere and proliferation of wireless signals are rapidly changing consumer behavior. Starting from how consumers get their news to how they shop is undergoing tremendous change.

In a recent survey by MasterCard, it was found that nearly 40% of US adults say they carry less cash today compared with five years ago, and nearly half carry $20 or less. Additionally, 86% say they want to use cash less often than they currently do. This trend is clearly leading towards an increased use of electronic payments for goods and services. I personally don’t think we will ever get rid of cash, however its use will continue to decline in the coming years.

All of these changes are disrupting the business landscape. Old style retailers are going out of business and new opportunities are popping up for anyone to grab. For example, traditional paper-based newspapers have seen their revenue shares drop significantly and are being replaced by electronic news readers, web based news providers and opportunities for independent journalist via blogging. Shopping is another area with huge changes. Traditionally retailers were used to only one channel to reach customers and that was brick and mortar. However, now brick and mortar is just one of many channels to reach customers. Internet-based shopping (e-commerce), media center-based shopping, catalog ordering via phones, and mobile shopping are the new channels that retailers are being forced to adopt quickly or see their revenues fall.

Social Changes

There is a social change that will play a significant role in disruption in this space. The current and next generations of consumers are a major factor in this disruption.

This generation, is growing up in a different world, their exposure to plastic money, gadgets, computers, and TV is making them very different, so their expectations are different from the market, they want a different user experience. In my opinion, this will be single biggest factor that will change the payment landscape. The 18-34 age group (generation Y) is more technology savvy and clearly uses the mobile devices more often for playing games, accessing information and for instant communication. Their level of comfort with technology and their eagerness to adopt new technology will be key factors in disrupting the payment landscape in years to come.


Where is all of this taking us? We have highly developed technology, a Hydra of retail channels, and constantly growing consumer expectations. In the recently concluded CTIA Wireless conference, the CEO of Visa summarized this as, ‘Convergence of payments an