The Triangulation of Mobile Payments

Watching the recent Republican and Democratic presidential debates, I heard again about how candidates have used the triangulation strategy to diffuse tensions off of a position they might have taken, to reposition themselves favorably on a subject or topic. (Quick ref: Triangulation).

Made me think that for mobile payments to succeed and become mainstream the traditional commerce and payment model that exists between a merchant and a consumer would need to be triangulated with the right enablers so that it is well suited for mobile adoption. A lot of ecosystem / platform build outs happening in this space which essentially on one side enable consumers to adopt the mobile technology and on the other hand enable merchants to propagate merchant level experiences and functionality creating essentially a pull towards a more adoptable use case for mobile payments. 

Once upon a time, cash enabled commerce to happen more freely as compared to what the barter system allowed. An ecosystem can be viewed as a collection of platforms (hardware/software), security, search, loyalty, authentication etc. working in sync to drive the capitalizing of market opportunities which results in commerce. When a consumer has access to commerce through the right ecosystem, he/she would transact with a payment type which completes the transaction in an ecosystem.

To give an example: a lot has been said of the "Uberization of payments" off late - in this case, the consumer transacts with the taxi driver (merchant) through an ecosystem which is a collection of what Uber developed as a platform on top of the mobile phones and their OS and hardware, using authentication, location based services and other capabilities of the phone. There by creating a shift from the traditional use of cash / cards. Uber also directly facilitates in creating and managing the market opportunity for the merchant. You can see trends like these around wallets which are industry / vertical specific. CurrentC's aspirations are clearly towards that. WEX's recent announcement is another case in point.

Essentially, there are 3 pulls which triangulate the case for mobile payments:

1. Ecosystem pull: this pulls the merchant-consumer interaction towards enabling a transaction on a mobile phone.

2. Merchant pull: this pulls the consumer and their mobile phones with aspirational and lifestyle attributes.

3. Consumer pull: buys into a market opportunity with a payment transaction - thereby enabling commerce.

Needless to say, every player in the mobile payments space thus wants to participate in building, controlling and/or participating in this ecosystem. As has been said before - post authentication, everything is a commodity in payments. Money to be made here is in how well you can participate in this ecosystem and how much of a pull can you influence on merchants and consumers to transact with the mobile phone.

As in politics, so in payments - triangulation is more of an art and less of a science.

Quick top of the mind references:

Nice article on lifestyle based integration of wallets and verticalized offerings

Elaborate article on platform evolution around ecosystems

Good article on how ecosystems can enable commerce