Wednesday, January 25, 2012

Mobile payments are in trouble (in the US)

Retail shops seem to be further away from adopting new types of mobile payments than we thought. It'll probably take another generation of technology to get them over their technological inertia. By that time, online retailers we'll be in an even stronger position to compete.
Jan 25, 2012. VBeat -- Because today’s retail systems are so inflexible, the integration of any third-party systems will result in a huge IT expense for implementation. The customization required so that all components of the point of sale system (including inventory management and payment processing) interact with a new mobile payment platform without disrupting the operation of the existing systems is cumbersome and expensive due to complex software integration.

The retailer’s cost to add even one type of mobile payment technology (such as Google Wallet) is currently very high, and since the market is so fragmented, adopting just one of the mobile payment platforms will only address a tiny portion of the market.

 A possible solution to the problem could be a partnership between online and brick-and-mortar retailers. In many ways, Amazon marketplace is this type of a distributed physical store, where a variety of retailers use Amazon's IT resources to sell their goods. The retail industry as a whole is at the end of their S-curve; therefore, transplanting it to a new payment technology is a big organizational challenge.

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