In this exclusive NEXTcast interview, ViVOtech's President and Founder, Mohammad Khan answers five burning questions on "what’s next" with mobile payments.
ViVOtech, a leading end-to-end enabler of next generation mobile payments, loyalty, and marketing solutions, provides Near Field Communication (NFC) mobile payment solutions, mobile marketing and loyalty applications software, Over-The-Air (OTA) provisioning infrastructure software, NFC smart posters, and contactless terminals.
Looking into his crystal ball, Khan sees the future of payments shifting toward mobile as consumers grow increasingly attached to their mobile devices. He believes the move to mobile will provide added benefit to both the consumer and merchant as it increases competition and decreases associated fees.
Khan shares how ViVOtech is driving mobile payment innovation and how it is opening doors for the loyalty and marketing channels of the mobile space. For Khan, its not a matter of if but when NFC and contactless will become mainstream, putting an end to the "petty plastic" of today’s payments.
For more on "what’s next" with Khan and ViVOtech, listen here:
What's the most significant payments application for mobile platforms that you've seen in the marketplace and why do you believe it is significant?
As you know, ViVOtech was founded to bring mobile into the payment and retail world. To that end, ViVOtech has already shipped more than 600,000 NFC (Near Field Communication) contactless readers in the U.S., Canada, the UK and many other countries. At the same time, ViVOtech has provided its mobile wallet, over-the-air provisioning and mobile promotion software to enable more than 30 NFC mobile payment field trials over last three years. Now ViVOtech is providing its NFC commercial solution. In fact, the largest NFC trial ever is going on right now, with more than 3,000 users through Citi, Vodafone, and MasterCard using ViVOtech software in Banglore, India.
Consumers who participate in Citi India and various other NFC contactless mobile payment field trials consistently find paying with mobile at the POS convenient and engaging. In fact, the most common question is, "Why can't I use my NFC phone to pay at more merchant locations?" Interest and adoption in mobile payments is growing: Citi saw a considerably higher usage of its card by its trial participants than we've seen in other trials.
I do believe that the mobile platform will be become a powerful payment device in the coming years, especially for day to day purchases below $100.
At the same time, mobile will change the payment industry landscape to one with more open competition among issuers than we have today, as well as make it much easier for a new breed of issuers to join the competition. At the same time, leading merchants will be able to enjoy better wallet share and top of the wallet use of their preferred payment cards versus what they have through existing plastic cards.
What are the three most important applications that you believe will be developed and deployed for mobile platforms in the U.S. in the next year? In developing economies?
In the U.S. and other developed economies, the three most important applications will be NFC mobile payments, mobile loyalty programs and merchant-driven mobile marketing and merchandizing. ViVOtech believes that mobile channel will emerge as the most efficient media to deliver the optimum value to consumers based on who they are and where they are.
In developing geographies, mobile is already gaining momentum with money transfer. There are a few success stories with SMS-based payments, especially in Africa. In the next two to three years, NFC mobile payments and bill payments will gain momentum.
Will mobile phones change how people shop at the point of sale, and if so, how?
Absolutely, yes. We will be surprised by how engaging mobile phones will become in our shopping experience. Mobile will help us find the right place to shop and the right product to buy. By just tapping our NFC phones on a shelf tag or even a product tag, we'll be able to get more information about the product before we make a purchase. Along with the product information, we may even receive a special offer if we purchase the product within few hours.
Equally, mobile phones will allow merchants to provide personalized services to me, as a consumer, based on who I am and where I am. Merchants and manufacturers will be able to reach me with offers and discounts most effectively through mobile, as long as I opt-in for such programs. That's why, ViVOtech has developed mobile wallet solution to deliver near-store and in-store shopping experience for consumers. In my view, mobile will become the most efficient merchandizing and marketing device available for merchants.
Consumers will be in control, as they will be able to opt-in for these programs only when they need them.
It is always good to have more constructive competition in any industry. Google Android enables hardware vendors like HTC and others to play effectively in the growing smart phone business. At the same time, Google Android still needs to prove that it can attract a wide range of consumers, as iPhone has been able to due to its ease of use and a long list of supported applications. Even my five-year-old niece has been playing with her mom's iPhone for the last two years. Will Android phones be able to penetrate into a wide consumer base as the iPhone has? That's still the question. Today, I still see more tech-savvy folks carrying Android phones than a typical consumer, even in business environments.
What mobile innovation do you believe will struggle to ignite and why?
Any mobile payment application that requires too many manual steps, like SMS-based payments, or requires entering a string of digits to use a gift card or prepaid card transaction are, in my opinion, a short-term phenomena. Such applications, however, do clearly show that there is an HUGE desire on the part of consumers to use mobile phones as payment devices, even if it means the nuisance of extra or manual steps for now.
We saw SMS-based payment starting in Europe seven to eight years ago, where it grew up to 2 million users in Germany, Austria and Spain. Then, it lost momentum as the slow and complex way to pay with SMS at POS was no longer sustainable.
Meanwhile, I believe mobile phones offering contactless payment using NFC or other radio frequency technologies will be the most scalable and widely used form of mobile payments for years to come. Why? NFC contactless payments deliver the same quick and easy experience for consumers as that already being enjoyed by close to a billion people tapping their contactless (NFC) cards to pay — predominantly in transit environments like Oyster at Underground in UK, Octopus in Hong Kong, multiple countries in Europe and in multiple U.S. cities, like San Francisco, Atlanta and Boston, as well as in more than 100 cities in China.
NFC contactless and mobile payments are here to stay, and will become the primary way to pay in coming years!
Bio: Mohammad Khan is the President and Founder of ViVOtech Inc. Mr. Khan held several engineering, marketing, and business development management positions during the 15 years he worked with VeriFone. Joining VeriFone in its early stage in 1983, Mr. Khan helped the company develop its payment automation systems and later helped successfully market these products in more than 96 countries. Included were the smart card and security payment products he conceived for VeriFone and launched to its worldwide markets in the early '90s. Mr. Khan was also a co-founder of the Internet Commerce Division within VeriFone and was responsible for expansion of its Internet payment systems business into more than 25 countries. Mr. Khan holds a master's degree in electrical engineering from the University of Hawaii at Manoa. In 2006 Mohammad Khan was recognized as a leader of the Electronic Payments Industry by the Transaction Trends Magazine and in 2005 as a “Mover and Shaker” of the Electronic Payments Industry by the Transaction World magazine.