It's Fishy: Salmon Says Mobile Payments Will Never Take Off

NEW YORK (TheStreet) -- In a post uncharacteristically void of meaningful data, Reuters blogger Felix Salmon makes some startling proclamations.

Based on personal experience, Salmon claims "mobile payments are harder than paying with plastic," before climaxing with ...
mobile payments, although they are sometimes very cool, are going to remain a marginal technology in the US for the foreseeable future.

As Springsteen riffed: Someday we'll look back on this and it will all seem funny. With this prediction, Salmon will, ultimately, enter a group populated by the likes of Microsoft ( MSFT) CEO Steve Ballmer and the former leader of the artist formerly known as RIM, James Balsillie. Funny thing is Salmon doesn't belong in that group; he generally does excellent work that wows me (e.g., his take on Tim Cook's sexuality).

Of course, Ballmer laughed at prospects of success for Apple's ( AAPL) iPhone back in the day. More recently, he blurted out some rubbish about Apple being "a low-volume player" in everything but tablets. Blackberry's ( BBRY) Balsillie contended, in days gone by, that you don't need an app to access the Web.

In this case, Salmon used singular personal experience that doesn't jibe with my own unscientific, anecdotal evidence.

Walk into a Starbucks ( SBUX), particularly in large urban areas. The number of people paying with their smartphone is off the charts. And I have numbers to back that up. According to the company, mobile payments now represent greater than 10% of all U.S. transactions. In January, more than 7 million people used Starbucks' mobile app accounting for 2.1 million weekly transactions. As of April, those numbers jumped to more than 10 million and almost 4 million, respectively.

The absence of those numbers in Salmon's post makes an already weak argument incomplete. Instead he focuses on Square -- failing to mention the partnership Jack Dorsey's company has with Starbucks.

Salmon claims "clever" and "newfangled mobile payment technique(s)" make him "feel curiously self-conscious and embarrassed" whereas "Handing over a card is normal behavior: mobile payments are not." That belongs on the forthcoming re-release of Ballmer and Balsillie's greatest hits.

There's a problem with focusing on Square and ignoring Starbucks (and Apple, for that matter). Putting it in simple terms, Square has a scale/infrastructure problem. It has to pound the pavement to secure clients. Starbucks doesn't have to build infrastructure or scale as much as it has to convert its already loyal stable of customers. Sort of like Apple and other smartphone makers lead the revolution away from feature phones.

But, to be fair, that's not at the heart of Salmon's argument. He cites "a fantastic piece" by Dan Rowinski that makes an ultimately misguided argument against mobile payments:
It's basically no easier or faster to activate the NFC or QR code in your phone or open an app than it is to dig out some cash from your pocket or pull a plastic card from your wallet. Try it. They'll each take you basically the same amount of time.

It's not about time; it's more about convenience. There's a distinction between the two things. Increasingly our lives are moving to our smartphones. Companies such as Starbucks and Apple knew this long ago. This knowledge of what will be -- not of what is "normal" -- is what sets Howard Schultz and Steve Jobs apart.

Without even as much of a whiff of context, Salmon closes his piece with this sentence: Look how hard it has been to kill off the check in this country ....

The numbers tell us otherwise.

According to data from the Federal Reserve, while paper checks will not go away entirely until 2026, we're writing 1.8 billion fewer of them annually. Tease out some of America's oldest enclaves, such as Pittsburgh's Allegheny County, and I bet we see fewer checks and more transactions via credit/debit card, ACH and, increasingly mobile means.

These mass revolutions just do not happen overnight. Falling victim to the social media-driven collective ill of Everything must happen ... right now!, it appears Salmon thinks generational transformations should go down overnight. It's not about the pace of the transition; it's about who's dictating that pace.

All it takes is for Apple or Google to jump into this game -- full bore -- alongside Starbucks, and we know they're both on the way, and you'll be able to use your smartphone to pay for more than coffee. It's one piece of technology. Comes out of your pocket and takes care of your needs, eliminating things like wallets and money clips.

And, the gaffes of Ballmer and Balsillie aside, the smartphone is now, for all intents and purposes, ubiquitous. Who would've thought you would be paying bills, buying stuff and consuming news and entertainment with the darn things multiple times a day less than a decade into the iPhone's domination? That reality alone provides more than enough ammo to counter the fantasy that mobile payments will remain "marginal for the foreseeable future."

-- Written by Rocco Pendola in New York City

Rocco Pendola is TheStreet's Director of Social Media. Pendola's daily contributions to TheStreet frequently appear on CNBC and at various top online properties, such as Forbes.

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