I have been writing about the reasons before, why people do not adopt mobile payment, in spite of many companies, brick-and-mortar and start-ups alike, preaching the awesomeness of it. In my last blog-entry on the topic, I looked into the rationality of opening another channel to be cyber-robbed, following the known fact that nearly every retailer has proven to be incapable of retaining privacy of customer data.

Now here is another reason – and a compelling reason to innovate to change that stalemate situation with respect to consumers!

Latest UFO arriving on this planet is Apple, who are getting a good bashing from some rather large chains recently. So why, oh why, should anybody in their sane mind pay with “Apple-Bank”, instead of unsing readily available other ways of purchasing? Why grapple with an expensive smartphone, when swiping a card does the trick easier and quicker, and without of having to let go of other items in the hands at the checkout till.

Well, the reason is as simple as it is obvious, and still most fledgling offers in this promising market (ah, since some 15 years it is promising, but not delivering) don’t get it right.

There is no added value for the customer. Simple, crystal-clear and yet so difficult to understand: In order to have them flocking to you, you need to give them  a compelling reason (which is different from your business case or your desire to earn money).

Well, you might ask, what is a reason if not transparency, swiftness, a super-cool UI, a wonderful secure data connection and every transaction landing in a near perfect data warehouse to make additional money from? Well, these are all reasons to offer mobile payments, but none of them is cool for the consumer, So they do what they always do if something has no added value to them that they perceive as a no-brainer.

Nothing.

Now, let’s look into the business model of an Indian/US innovator. Mr. Palaniappan has changed the way, paycheck-credits (cash loans) are handled. Rather than asking for horrendous interest rates, like so many cash loan shops do (how does an interest rate of 360-780% sound to you? Figures are from a study of the Fed on the topic) he asks for tips.

His business, Activehours is offering cash-advances on actually worked hours in a given month. So if the person requires to purchase something beyond their immediate possibilities, their work-days and the salary are put into the calculation and they can then get some cash in advance.

“Activehours is the sweetest way to get your pay. You choose when to get paid for the hours you’ve already worked. Simply log in to your Activehours account, cash your available hours, and receive money for those hours the next business morning.” ( FAQ | Help | Activehours.)

The whole process only requires an app. It is simple and easy. The drop-out rate is absolutely low, says founder Palaniappan, they did not have to block any lender yet, in spite of qute a large customer base.

Now imagine, Mr. Palaniappans business-model combined with a mobile payment app that is integrated into the one that handles the cash-loans. Would it be easy and have a slim UI, secure communication and everything? Most probably, but that is not the raison d’etre. There would be the no-brainer we were looking for: If you don’t need the whole cash-advance, then it would not take it out of the loan, and the loan were lower, leaving the lender with more at the end of the month.

This is just an idea. It is, quite frankly, maybe not even a valid business model. But it shows the deficit of the mobile payment industry today: The lack of a compelling reason for consumers to embark on the offers out there (and there are a lot already).

The lack of innovation. Whoever wants to disrupt, has to convince the customer first.

Photo: Paul-Georg Meister  / pixelio.de