The rise of smartphones and mobile computing may spell the beginning of the end for wallets and bank or credit cards.
A report published in December by the business technology research and advisory firm Aite Group says mobile payments in the US will grow at a compound annual growth rate of 68% from 2010 to 2015, climbing from $16 billion in 2010 to $214 billion in 2015.Well-timed opportunity
For mobile payment and billing platform and service startups, the timing could be plum to craft a strategic PR push to consumers, merchants, and third-party partners on their services by taking advantage of the fervor around smartphone technology and apps.
"One big opportunity we are very thankful for is mobile payments are creating more excitement and interest. More people think the time has come," says Matthew Murphy, GM for the Palo Alto, CA-based mobile payment startup Bling Nation.
The company uses Near Field Communication (NFC) technology with a tag on the back of a smartphone that can be tapped to make in-store purchases.
Generally, payments and billing services through a user's mobile phone range from tap-and-pay, in-store purchases using NFC, to direct mobile billing where digital goods such as ringtones and social games credits are purchased with a mobile phone number and the charge appears directly on the user's phone bill.
"The most important thing in mobile payments right now is education," says David Speiser, founder of DRS650 Media Solutions, PR AOR for the San Francisco-based mobile payments provider Boku. "The billing industry, so to speak, has not undergone a whole lot of really stunning changes in the past five or six years."
Boku partners with mobile phone carriers and Web merchants to allow users to buy digital goods with their mobile phone number. The charge appears on their phone bill.
A critical PR and marketing component of these services is to build awareness and establish the necessary merchant and third-party business relationships. "It's really a chicken and egg-based model where you have to get the merchants so the consumers have a place to spend," says Murphy.
Bling Nation launched last July in beta with PayPal, with the service now being offered in San Francisco and the Silicon Valley corridor. Murphy plans a nationwide marketing and PR push this year.
"We are getting in front of as many people as we can to spread our word and show our platform," he adds. In August, Bling Nation hired GolinHarris to build awareness via consumer education and social media.
To incentivize early adoption by users, partner merchants are handing out Bling Nation tags to shoppers. Bling Nation has also built in a loyalty program and social media component to its service.Seeking reductions
For Boku, Speiser says a major PR goal is to get carriers to reduce their surcharge for handling the purchases, which can run up to 40%, and convince carriers that a lower surcharge will boost customer volume.
"As mobile payment expands into new verticals," he adds, "those rates must come down."
Boku also hopes to intertwine its service into smartphone apps by building relationships with developers. Last summer, it launched a kit to help software developers build Boku into apps for Google's Android smartphone.
But mammoth PR challenges remain for mobile payment platforms, says Candace Locklear, MD and head of the mobile practice at SparkPR, including changing consumer behavior and convincing the market these services are reliable and secure.
"It's one of those things with mobile payments, even online payments before: it took a lot of time for people to trust Amazon, right?" she adds. "Those are the big challenges. Someone with a credible voice and track record has to say, 'It's easy and safe. Let me show you how it's done.'"
Indeed, but the quest for convenience in a cluttered digital world may prove to be the best PR. "You may not always have your credit card or wallet with you, but you always have your phone," says Bling's Murphy. lPay players Boku
HQ: San Francisco What it does: Mobile phone payment service for virtual goods Founded: Launched June 2009 Funding: $38 millionBling Nation
HQ: Palo Alto, CA What it does: Tap and pay for in-store purchases using mobile phone Founded: 2007 Funding: $28 millionZong
HQ: Menlo Park, CA What it does: Mobile phone payment service for virtual goods Founded: Nov. 2000 Funding: $15 million