Why Mobile Payment Apps Are Not Good for Consumers

Disclaimer: I am a consumer. Everything I know about mobile payment apps comes from my experience as a consumer who refuses to use mobile payment apps.

A lot of companies now want you to use a mobile payment app when you pay at the counter in their retail stores. I suspect they have two reasons for wanting this:

  • Mobile apps give them a new customer communication channel for marketing and sales.
  • These apps allow stores to collect your payment without paying a credit card fee.

You can’t blame companies for taking advantage of either of these opportunities – this is the sort of thing that gives them a chance to be competitive and to grow. And anyway, good marketing and sales (which is much more rare than I wish it were) leads to good consumer experiences.

But aside from the neato factor, I don’t see any consumer benefit to using a mobile payment app. A Starbucks poster on my train this morning claimed that using their payment app was faster than your traditional payment methods. But is that really true? I mean, I’ve gotten pretty good at pulling out my credit card, and that’s already faster than using cash.

Worse, there are several potential disadvantages to mobile payment apps, which make the whole thing a deal-breaker for me.

  • No security against fraud – Your credit card protects you against fraudulent transactions, and the protections are pretty darned good. A mobile payment app does not.
  • No security against getting my phone stolen from my hand – I don’t know about you, but I’m not a big fan of pulling out my $500 smartphone in crowded areas, especially not in a predictable area like at a store counter where I’m about to make a payment. (Yes, $500 is the approximate replacement cost of a typical modern Android or iPhone device.)
  • Potentially glitchy software – When I saw a woman at Starbucks this weekend trying to make a mobile payment, the clerk had a lot of trouble getting it to go through.
  • Food all over my touch screen – I’m a messy guy. The more I use my phone around food, the more likely it is that the screen will turn opaque with dried latte and scone crumbs.

Of course, I would reconsider these disadvantages if the mobile payment app offered some benefit – perhaps a rewards program or discount. Or for Starbucks in particular, if I could scan my usual drink order directly into the register (“One small cup of your finest coffee, please!”) so that the clerk doesn’t get confused about why I don’t want steamed milk or syrup, or why I don’t want to up-size the cup size. Better yet, the Starbucks register could detect my presence in the store by identifying my phone’s secret key via WiFi, and start generating my order as soon as I walk in. And also give me easy access to their WiFi network since I am a regular and good customer. 🙂

As it is, there aren’t any advantages for the customer that I can see. Keep in mind, I have not used any of these mobile payment apps – it’s possible some of the features I am looking for are indeed included. But the truth is, they haven’t done a very good job at selling me on the value of the mobile apps in the first place –  it just seems like all the advantages are on the side of the retail store, and I still prefer to use my credit card.

“Yes – oh, I’m sorry, I mean… oh yes, well I was just finishing a blog post. I said I was sorry, I didn’t see that there was a line. Yes, okay – I would like one small cup of your finest coffee, please!” 😉


2 Replies to “Why Mobile Payment Apps Are Not Good for Consumers”

  1. I don’t have a smart phone and so this doesn’t involve me at all but it’s a great step to a cashless economy which is a benefit to everyone. The key is making it available to everyone and of course security. There is an obvious technical solution, the use of a finger print app to verify the owner. That is the future. It can actually be made even simpler and not need the phone. The merchant and vending machines  could could have finger print scanners that are linked to your bank account and you don’t even need the phone. India is using the rudiments of the system for banking in rural areas.

    1. But how is any of this better than a credit card? I know that U.S. credit cards have problems which make them fairly easy to counterfeit. My understanding is that European cards don’t have this problem. (Sorry – I don’t know the details, so don’t quote me.) But the counterfeiting problem doesn’t affect me significantly since credit card vendors assume 100% of the liability for any loss. When the numbers don’t work out favorably to continue doing that then I am sure they will improve the cards to prevent counterfeiting.

      The credit card system is already cashless, mature, stable, widespread, and convenient.


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