Sunday, November 16, 2008

Beem mobile payment - a fad or the future of cash?

I should come clean straight away and say I do struggle to understand why I might want to make day-to-day payments using my mobile phone - but then I am nearly 40 and so perhaps I am missing the point ;-)!

I was interested to see the new payment service from Beem which was announced recently. This so far allows users to pay for pizzas and taxi rides from some providers in the London area by sending txts from their mobile phone.

Their business model is Oyster-like in that the user's Beem account is charged up via debit card payments whenever it falls below a minimum and so Beem will generally be left holding a credit balance on which they can earn interest. They take fees from merchants as well but these are allegedly significantly lower than for more conventional payment methods.

Unfortunately the whole service is based on users interacting by sending structured SMS messages. Very paypalmobile-esque.This leads to two significant issues:
  1. The user error rate will be very high leading to large support costs and loss of user confidence.
  2. There will be significant moble messaging costs associated with operating the service.
This strikes me as being an almost ideal example of how not to do a mobile payments service. With this sort of service user confidence is everything!

Looking a little more broadly it will be interesting to see the progress of the ongoing convergence between travel passes and contactless payment mechanisms e.g. the barclaycard+paypass+oyster combination card. Perhaps in due course it might make sense for these to converge with the mobile device? I remain to be convinced.


Anonymous said...

Hi Geoff,

Thoughtful post. How many users does Beem have now? Have they gained much traction? I'm in the US so hard to tell from here ...


Anonymous said...

Beem is being introduced in the US as we speak and will probably work better with the student demographic than the any other age group.