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Acceptance of Mobile Wallet: Barriers, Challenges & Consumer Behaviour

Accrediting the shifting trends in mobile payment space, financial institutions, telcom operators and vendors are very incisive to explore the latest approach to withstand in mobile wallet eco-system. Nearly all the  articles provide vibrant evidences of mobile phone users, unbanked customers, smarter way of payments and revenue generated by mobile payment system (forecasted to be $800 billion by 2017). However after spending few months with our Team who are committed to implement mobile wallet ecosystem in under developed countries (Nepal, Bangladesh, and Kenya), made me realized that it requires more than an ecosystem to take the project to success.

Consumer’s dependency on mobile phone is rapidly intensifying with exponential rate. Addiction of getting information about social networking sites, professional & personal emails and financial updates are considered priorities, hence these facts have been the driving force behind introduction and seamless service of mobile wallet. Though the adaptability rate of mobile wallet is quite high, impediments are playing their part. A complete mobile payment ecosystem consists of Regulatory Authorities, financial institutions, telecom operators, merchants, users and technology providers. Each component has its own significance. This ecosystem is interdependent and differs itself from the term ‘mobile payment’. Enhancing mobile payments with location based services, consumer preferences, digital coupons, reward points and humanizing brand loyalty turn mobile payments into a complete mobile wallet. A user expects a stagnant response from each component, failure to this will lead to the unacceptability of services.

Study reveals that major barriers for consumers are communication systems, lack of accessibility & interoperability and infrastructure inadequacies. Even Google Wallet is yet to be a success due to a very small number of users, retailers of NFC enabled payment mechanism.  Now, the true challenge is to please consumer and retailer in order to provide them an innovative shopping experience through mobile phone. It is universally accepted that omnipresent magnetic strips credit cards are too difficult to obsolete, therefore switching to mobile wallet is obviously an uphill task.

Fear of losing mobile phone is also an obstacle to endorse mobile wallet. According to a source (Lookout Labs), An American loses one mobile phone a year. Hence the security matters and even more when a mobile phone is a replica of user’s credit card, Which actually question to initiate alternate ways to authenticate the transactions. It also encourages all the providers to be more creative in order to enhance the mobile payment system with more security. The question to be answered is what if we lost our mobile phone or battery goes dead.

The only live and successful case study of mobile wallet in any underdeveloped country is from Kenya, with per capita GDP $1800 and 40 % of unemployed population (According to CIA World fact book). One of the major component of its success is poor banking infrastructure with very few ATM installed. The subscribers are hooked to use mobile phone for any transaction as It’s difficult to find ATMs at every corner in Kenya.

A true success of mobile wallet will only be possible as a whole ecosystem. Users and merchants are two valuable factors of this eco-system, they need to be educated thoroughly. If the awareness is uniformed among these two components, they could be the driving force to foster mobile wallet.

Since being the technology provider in this mobile wallet eco-system, we cannot rely on inadequate infrastructure and the large number of mobile phone user in each country to promote mobile payment system every time.

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