If you prefer to pay with plastic rather than with your smartphone, you’re not alone. Despite ongoing hype about how mobile payments are poised to take over the way we pay, most people seem happy to stick to what they’ve got.
As Apple CEO Tim Cook said in an earnings call last week, mobile payments are “just getting started” and have yet to reach a tipping point with consumers.
That’s good news for entrepreneurs, since opportunity abounds if you’re innovative enough to create something that will stick.
A growing number of mega merchants, including Starbucks, Walmart, Home Depot and Chipotle, are experimenting with mobile payment apps, ranging from Square’s mobile “wallet” to PayPal’s in-store check-out. Meanwhile, entrepreneurs around the world are brainstorming fresh ways to break through consumer reluctance and get more people to ditch their cards and pay via mobile.
Despite the noise that surrounds mobile payments, I have yet to hear of anyone who’s come up with a satisfying answer for what payment entrepreneurs need to do to persuade more people to try something new.
I thought about that dilemma earlier this week while reading the obituary
of the man whose invention entrepreneurs are trying to recreate. Stanley A. Dashew (who died last week at the age of 96) was the first to come up with the idea of plastic cards in place of paper, and his legacy lives on in just about every person’s wallet.
To put his ideas into practice, Dashew recruited a team of engineers to help him build a charge card made with durable plastic that could be imprinted with personal account information. He sold his invention to Bank of America, who used it to create the first plastic BankAmericard, and then to American Express and Chase. Before long, every payment card was made with embossed plastic.
The challenges that Dashew faced to get his cards into production were different from the ones that today’s payment entrepreneurs face. However, Dashew’s experience may still be instructive for many — particularly those just starting out.
Toward the end of his life, Dashew published a small handful of advice columns targeted directly at entrepreneurs, including two pieces
in the Huffington Post and an essay
in the Christian Science Monitor. If you’re interested in entrepreneurship, they’re worth a read. The columns draw heavily on Dashew’s memory and are full of fascinating insights into his thought processes when he invented the plastic card.
Among the nuggets of advice most applicable to mobile payments:
Ask yourself: What bugs you most when you’re shopping or visiting a cafe? In a Huffington Post column titled, “How to Succeed in Small Business Even During Hard Times,” Dashew asks readers to consider a problem that consistently annoys them.
“Chances are, whatever the problem, others feel the same way,” writes Dashew. “I made my first fortune in starting a company that automated the credit card industry, because paper cards were very problematic and really grated on the nerves of bankers.” They easily tore, were prone to human error and became hard to read after consistent use, he writes.
So far, most payment entrepreneurs have yet to come up with a system that’s easier to use than handing over a card to be swiped. As Brian Chen and Jenna Wortham pointed out on the New York Times Bits blog
a few weeks ago, a lot of mobile payment systems available today are not only unreliable, they’re a pain. Why bother with setting up an account if you’re not sure a merchant will accept it — and you can easily get your card swiped in less than 30 seconds?
On the other hand, as Chen and Wortham write, if your mobile payment app allows people to skip doing something annoying — such as waiting in a long line, as the new Chipotle payment app apparently does — then maybe it will prompt more people to sign up.
Get into the minds of merchants, too. Merchant adoption has long been a problem for mobile payments. Take, for example, mobile payment systems that rely on near field communication technology (NFC). It’s been nearly two years since Google splashily debuted the Google Wallet and almost a year since mobile phone carriers Verizon, T-Mobile and AT&T followed up with an NFC-enabled competitor.
However, neither system has managed to become widely adopted, thanks to a number of roadblocks, including reluctant merchants who have yet to be persuaded that installing an NFC terminal is worth the hassle and expense.
Perhaps mobile payment entrepreneurs would be more successful if they took a cue from Stanley Dashew’s experience and earned merchants’ loyalty by studying ways to make merchants’ lives easier.
To illustrate, in order to get issuers to latch onto his technology, Dashew had to first figure out what other problems the issuers were trying to solve. In his case, banks were eager for an easier and faster way to process customers’ payment data. So Dashew came up with a system that allowed the plastic cards to automatically process customers’ payments, beginning with their first swipe.
“Here’s where I had to really jump into the skin of a banker,” wrote Dashew in the Huffington Post. “After doing more research, I learned that the flow of credit card paperwork began with the merchant at the point of sales. If that starting point couldn’t be automated, the entire system would fall like a house of (credit) cards.”
Accept failure. If your entrepreneurial career manages to last, it’s inevitable that you will fail at some point. But that’s not necessarily a career ender.
In an interview
with Monsters and Critics, Dashew stressed the importance of career low points in prodding him to work harder and achieve more than he otherwise would.
It’s a good reminder for mobile payment entrepreneurs who are competing in a crowded market for the attention spans of people who are less-than-interested.
“The trouble with success is that it fools you into thinking the only way is up,” said Dashew in the interview. But, “that’s rarely the case with business or life in general … it is in the twists and turn of events, when forced to exercise more endurance and hard work than I thought I had, that I’ve achieved my greatest successes.”