Numbers like 721 billion (the amount of money that will be spent via mobile devices) and 450 million (the number of mobile wallet users expected by 2017), attract a lot of attention.
Drawn to consumer loyalty and the potential of mobile payments to gather valuable marketing information about how people spend, telecom companies, Internet giants, retailers and financial institutions (FIs) are all working to establish a presence in the hearts and minds of consumers.
In a recent example, Facebook is preparing to enter the mobile-payments arena. You can see it in their most recent movements toward global remittance and electronic-money services. The social network is close to gaining approval from the Central Bank of Ireland to launch a service that would enable Facebook users to store and transfer money to other users.
According to a recent Financial Times article, “Facebook wants to become a utility in the developing world, and remittances are a gateway drug to financial inclusion.” Facebook as a utility is a really interesting concept, especially when you consider its investment in drones as a method for delivering high-speed Internet to off-the-beaten-path locales.
Facebook’s decision to offer payments services naturally leads to the question of user trust. Will the average Facebook user trust the social network with his or her payment card information?
Ovum’s 2013 Consumer Insights survey concluded that just 1 percent of those polled trusted Facebook to provide mobile payments. Conversely, 56 percent of respondents trusted FIs or credit card companies – still remarkably low considering those companies are already in that business.
While these studies seem to indicate otherwise, consumers around the world have already trusted Facebook with all manner of personal information, including their precise location, closest associates and pictures of their children. Predicting they will soon feel as comfortable sharing their financial information does not seem too much of a stretch.
However, it remains up to FIs to lose what is already an upper hand in the trust game. With often years-long relationships on their side, credit unions and community banks would do well to leverage the trust they’ve earned to provide simple, customized, secure and, most importantly, consumer-centric payments tools.
