Shortchanged: Why consumers are snubbing mobile payments

by. Rita Gunther McGrath

Disruption is all very well, but it’s risky to depend on people to change their behavior to support your business model without a corresponding major benefit to them.

It’s interesting, therefore, to consider what is going on in the global payments space. With payments being made on mobile devices, many consider it an industry that is ripe for disruption.

If you think about successful disruptions, they didn’t usually require people to massively change their consumption habits—or if they did, it was to get access to something they couldn’t have or couldn’t afford before. The iPod, for instance, allowed people to do what they’d been doing for decades—carry music around in portable form—only in a simpler, more convenient way. Using Internet searches as a lure to get people to be exposed to ads did change behavior, but it offered a major benefit: namely, the ability to quickly find bits of information that would have previously required an extremely cumbersome process.

Back in the ’60s and ’70s, most Americans paid their bills by check. Early credit cards, such as Diners Club and American Express, did exist, but it wasn’t until 1966 that the two behemoths of the payments business—MasterCard and Visa—came on the scene. Before this, most credit cards were store and gas cards that could be used only where they were issued. This, obviously, was a nuisance.

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