Mobile payment will be less about the wallet and more about relationships

Mobile payment is grabbing the spotlight at Mobile World Congress 2012 this year. Carrier payment and NFC, the two major logjams in mobile payment so far, appear to be inching toward solutions for consumers. A lot of conversations around mobile payment are centering on the ideas of mobile wallets and a swipe-and-go payment experience. Those conversations are nice to read, but they are missing a much larger picture. Over the last few decades, swipe-and-go has been the only incremental improvement to the consumer’s credit card payment experience. Mobile payment will open a much wider window of opportunity. It will redefine the retail shopping experience, our relationship with money, and merchants’ understanding of customers.

Mobile payment will re-shape shopping, literally

Every inch of retail stores today is carefully considered. The goal of retail store design is to use customer circulation to maximize sales-per-square-inch. Allowing consumers to check out by themselves using automated cashiers spread across the store and possibly leave the store with just an electronic receipt means the layout of stores, along with browsing and check-out processes, will need to be re-considered to assist an entirely different purchase journey. With payment apps on smart phones, retailers can also guide customers to different parts of the store using real-time offers and advertisements. For example, if you scan a bottle of olives and pay for it using an app from a supermarket, it can offer you $1.00 off a package of pizza dough located on the other side of the store. Stores designed for mobile payment will be very different from what we’ve ever seen.

We’ll understand how we spend our money better

Most of us log our thoughts on Twitter and Facebook, but only a small percentage of us keep track of where our money goes. That is because tracking spending is difficult and not as rewarding as it could be. Tracking cash spending today requires mind-numbing bookkeeping. Even after hours logging information into your computer every week, we only get a fuzzy picture of our spending habits because credit card transactions are never properly categorized. My recent purchase of a hoodie from a mall, and a keychain from a hardware store are both categorized as “Merchandise” by my credit card company. A receipt from payment solution CardCase (by Square, available today) tells me the geo-location, the time and the amount of the purchase along with an itemized receipt.

Receipt image by Square

Over time, I can see how I spent my money with much better precision with close to no additional effort. A quick sync with financial management software like Quicken or Mint.com will allow me see exactly where my money has gone and be much more efficient in managing my financial health. A new mobile service may even be able to advise me on what I can afford in real-time.

Merchants will know us better

An understanding of consumer’s taste today, especially for small merchants, is retrospective. Merchants know what their customers bought but not what they want. A service that allows consumers to research merchandise inside a store and pay for purchases can provide analytics similar to what exists with e-commerce sites today. Connecting those consumers with their social profiles (with their permission and in aggregate to preserve privacy, of course) can help the merchant decide what else he should offer.

With little doubt, a new breed of mobile payment service will usher a new level of convenience into the daily life. The most disruptive services, however, will not be the ones that spare us from fishing for credit cards and coins. They will be ones that help us create better relationships with the places we shop, our money, and the people who we purchase from.

Cover image by LancerE via Flickr