Report highlights fragmentation in mobile payments
Mobile payments have been showing strong growth throughout the U.S., but this growth has not been as steady as had initially been expected. This week, the Federal Reserve Banks of Boston and Atlanta have released a new report concerning the expansion of mobile payments. The report suggests an emerging fragmentation in the mobile commerce sector that has served to derail some of the progress that has been seen in mobile payments over the past few years.
Mobile commerce shows modest growth over past two years
According to the report, entitled “U.S. Mobile Payments Landscape — Two Years Later,” the mass adoption of mobile commerce is unlikely without strong support and collaboration from multiple organizations and industries. Over the past two years, mobile payments have grown more popular but have done so under harsh criticism. Mobile commerce has been dogged by concerns regarding security and many of the issues that consumers have with mobile payments remain unresolved due to the lack of interest many companies have in this field.
Multiple approaches lead to slower growth
The report claims that the advent of mobile devices has created an effective way to create a dynamic marketplace for consumers. As mobile commerce entered the limelight, companies, particularly banks and telecommunications organizations, began teaming up to engage consumers in a new form of commerce. Various such partnerships and collaborations have formed over the past few years, with each partnership experimenting with ways to make mobile payments more attractive to consumers. This has lead to some fragmentation as the various parties focus on very particular aspects of mobile commerce.
Non-banks introduce more risk to mobile payments field
While innovation has been encouraged in mobile commerce over the past two years, this also comes with significant risks. Non-bank organizations that are getting involved in mobile payments represent the majority of the risks associated with this sector. This is due to the fact that these organizations rarely have the security experience that financial institutions have and are not held to the same laws that banks are.
In-app purchases are becoming a prominent trend in mobile games
In-app purchases have become very common in the world of applications, especially where mobile games are involved. Many mobile games are using in-app purchases in order to generate revenue. These games offer virtual currencies and in-game items that make the gaming experience either more fun or less of a challenge. Many consumers have shown willingness to make in-app purchases because it allows them to skirt the otherwise unappealing aspects of certain mobile games. The value of these in-app purchases has been a debated issue, especially as some consumers begin to consider the practice somewhat dubious.
Developers leverage in-app purchase to generate revenue
Mobile games developers are in a somewhat precarious position when it comes to selling their products to mobile consumers. It is considered a nearly impossible feat to sell these consumers mobile games that cost more than $5, as mobile games typically offer significantly less content than those designed for consoles, which tend to be sold for $50 or more. The appeal of mobile games is that they offer entertainment at a very low price, with many of these games being completely free. Developers, however, have to generate a profit in order to stay in business. Apart from advertising, in-app purchases are considered the best way to produce revenue.
Mobile games may be more expensive than they appear
In-app purchases allow developers the opportunity to generate more money as they are not considered a one-time affair. With conventional games, such as those for consoles, the consumer pays for the game itself but may never make another purchase in the future. In-app purchases can encourage consumers to continuously pay for features they find engaging, and purchases can be made with little more than a few taps of the finger. While this may be a good way for developers to generate revenue, in-app purchases in mobile games have been causing some problems for consumers in recent months.
In-app purchases lead to young consumers spending money
Mobile games are enjoyed by consumers of all ages, but the primary demographic for most of these games falls in the 12-17 age range. Children that play mobile games are not typically concerned with spending money while they are enthralled in their gaming experience. As such, they are more likely to conduct in-app purchases without permission, just so they can access certain features of a game more quickly. In 2011, Garen Meguerian’s 9-year-old daughter spent more than $200 playing a simple mobile game, which lead Meguerian to file a lawsuit against Apple claiming that the company had made it too easy to conduct in-app purchases.
