Mobile payments continue to be an exciting area of innovation we’re watching closely. But there’s still a question whether there’s a bit of over-excitement. Given that paying with cash and credit card isn’t really broken, are many mobile payment offerings a “solution in search of a problem?”.

The answer is yes and no. But what needs to happen for any successful mobile technology is a considerable value exchange that will cause users to switch what is a very entrenched habit. Not only is payment behavior very habitual, but it’s something where security and comfort levels are vital.

People aren’t going to jump on board just because it’s a shiny new thing: It’s going to need much greater “value exchange”. Give me something better than the proposition of leaving my credit cards at home. The atomic weight of a credit card was never a pain point, so why does it need replacing?

We’re starting to see better offers in exchange for users’ mobile payment adoption. Starbucks continues to roll out features to save time for users, which is a tangible reward. Paypal is likewise thinking in these terms with “order ahead” and “skip the line” functionality. And Apple is a sleeping giant here.

I covered this concept in my monthly Street Fight column last week. You can check out the excerpt below and the full article here. This will continue to be a big topic for us, including at our Atlanta Leading in Local conference in just three weeks. Email me for a discount code (mbolandATbiakelsey.com).

Payment Technology: If it Ain’t Broke… Start an Entire Industry to Fix it.

Mobile payments is an exciting area of cultural and technological disruption, and at the same time a solution in search of a problem. Somewhere in all the excitement, we seem to have forgotten that paying for things with cash or credit card ain’t broke.

We’ve been covering mobile payments closely on this blog and many other places because it’s endemic to local commerce. Compared with m-commerce (i.e. Amazon Mobile), we’re talking about the emerging area of paying for physical goods in physical stores with your phone.

Or in some cases the mobile device isn’t on the user end but on the merchant end. That’s where we see things like Square and PayPal Here, which truly are disruptive technologies that democratize credit card acceptance among a huge swath of very small businesses (VSBs).

But notice how those few examples are the biggest success stories in what’s become known as “mobile payments.” One seldom-cited reason for this success is because they haven’t asked the user to change behavior. In other words, it’s still just a good old fashioned credit card swipe.

Compare that with many mobile payment technologies that ask the user to jump through a bunch of hoops to set up accounts. Once set up, the value proposition includes having a wallet that is lighter by the atomic weight of a Visa card. Or a loyalty program to get a free small coffee once a month.

Near field communication (NFC) is another example. Besides being held back by chicken-and-egg implementation challenges (device and POS compatibility, network effect, etc.), the value proposition was never that great to begin with: Tap your phone instead of swipe a card.

Add to all of this the fact that payments is a very entrenched habit for which comfort levels, security, and acclimation are paramount. Changing habits in such areas isn’t going to happen through marginal offers; it will require sizable incentives. For example, saving time. Lots of time.

That’s where Starbucks is moving. It has been the poster child of mobile payments by using its brand to put the practice on the map and to acclimate users. Continue reading.