M-Pay: The New Normal?
Twenty-something years ago in the USA, mobile payment (m-pay) had been predicted as the future of cash. It has still not become the normal there except at coffee and doughnut outlets. As India follows USA in almost everything, will this be the case here too? Critics may ask why compare with the USA when they follow us at least in political games, but the world follows them in tech innovation. Do marketers need to strategise differently for India or just do what they do today?
The American morning ritual may have expanded the m-pay technology there but we do not have that ritual thanks to diversity of food habits. We have a government-forced system that most supporters to digitisation believe will proliferate the cashless regime. Although the technology is not new, and we are the fastest growing market for smartphones, there are no great examples here of companies leading the m-pay drive in a similar fashion as Starbucks and Dunking Donuts did with their unique m-pay apps.
The Dunkin' App was downloaded 18 million times or so since its launch four years ago and it integrates Apple Pay and Visa into it allowing customers advance purchases and quick pick-ups. Their value proposition to customers was clear: enhanced convenience and tech-based loyalty programme. For a society that eats to live unlike the French who lives to eat, this has been a huge benefit and they achieved success without much marketing efforts. By tying the loyalty programme to m-pay, even more customers jumped in. Starbucks App is even a bigger success with 24% of their sales coming from the app. Avoiding the morning queues and earning points are big attractions for the 18 million active users.
When the value proposition is clear and appealing, adaption to technology products and services become easier and there is no need to push things to potential users as GoI is doing. All attempts to teach GoI on identifying and communicating the right value proposition for the five distinct segments of population that exist fell through the gaps at different levels of bureaucracy. While they understand the value proposition is not right even for BHIM, they refuse to follow the prescribed antidote. Marketing 1.0 anyone?
In the USA, those who use mobile devices to make payments use it at fast food (40%), grocery stores (35%), convenience stores (33%) and full service restaurants (33%). Although analysts predicted more m-pay with smartphone penetration, it has not yet achieved a critical mass there, as consumers seemed less enthusiastic than analysts. Even for the current year, the projected m-pay is about $30 billion against an estimated consumer spending of $12 trillion. Is this a warning sign for India's digital optimism?
When mobile marketing reaches its tipping point, both government and companies will see many benefits from customer data and tracking. Tipping point exists in the intersection of technology infrastructure, techno-ready consumer base, the always-on contactless payment system, and the brand power of companies such as MasterCard, Visa, Samsung, Apple and Paytm. When we have all the four, we will beat the rest of the world in leading m-pay. With just 20% smartphone penetration, a substantial chunk of tech-averse - and cash-loving - population, and the poor penetration of payment systems, it will be a challenge unless government and companies join hands to change the above four elements. One of the first steps to take is identifying the quantum of people in each of the five segments of techno-readiness. The top two segments (Explorers and Pioneers) hardly need much persuasion to adaption. The middle two (Skeptics and Hesitators) will need longer time but the right value proposition and push could help speed up. The last one, Avoiders, probably large in India, will embrace tech adaption only after almost all the others have done so and trying to convert them now is a waste.
For companies to invest in their own m-pay apps, they need to see an imperative for people to change into m-pay. If you were going to visit a D-Mart or Shanti Sagar only once or twice a month, would you need an app for it? Many people have enough time on their side in rural and semi-urban areas and unlike the Americans, they don't need to whip out a mobile and pay on the go.
Driving m-pay by force is no remedy. No government should control its citizens and penalise for making their choices. A fear psychosis will only increase resentment and already people are asking why banks impose charges for withdrawing one's own money. In a democracy, freedom is everything - even in terms of payments and not just in religion, opinion or food. If people want to use cash and no tech, that should be respected whatever be their reasons. Tolerance starts with the government and proliferation can only be gradual, as we have seen elsewhere in the world with our research on techno-readiness. No system can sustain on the basis of fear or penalty.
Instead, government should offer incentives for m-pay and facilitate to make smartphones cheaper, usher-in inter-operability between various digital channels, build safety, privacy and security for m-pay users, reduce unncessary charges and make it a pleasure to use m-pay. Key is also in educating people on the use of m-pay in a similar way Visa had done in the USA with point-of-sale videos on how to use m-pay.
Companies expect government to do the tech build-up and reach, but what if people don't want it or are not ready for it yet? The best way will be to roll it out one segment at a time with the right incentive for each. That will stagger investment, avoid waste and fast-track India up the learning curve to beat the Americans when millennials have more money to spend, breakfast or not!
