The Mobile Money SolutionOver half of the world’s population is using mobile phones, and about half of those own a bank account. Since everyone needs some sort of monetary payment to survive and we are integrating technology more efficiently into our daily lives, it’s a natural connection that mobile money could be the way of the future…that is, if it overcomes some of the current barriers.

Mobile money, also referred to as mobile payment, mobile money transfer, and mobile wallet, generally refer to payment services operated under financial regulation and performed via some sort of mobile device. Instead of paying for goods or services with cash, check, or credit cards, a users can access a mobile device and electronically make the payment. It is only recently that some forms of mobile money have become mainstream, and that is mainly due to the advancement and availability of technology that fuels the system.

It may seem surprising that mobile payments haven’t caught on quicker, but there are some glaring barriers to entry that are a little different from traditional product/technology adoption.

Here are a few reasons mobile money isn’t raking in the dough just yet:

1. Complicated and not focused. Because we have easy and available access to our money via cash, check, or credit cards, some of the mobile payment systems seem like an overlap and just another option. Although consumers appreciate options, sometimes there are just too many and it becomes overwhelming, creating noise. Where is the compelling value proposition that is going to make me move my money? Or maybe I don’t have to move my money? I don’t know. Nevermind.

2. No reason. Give consumers a reason why it’s worth their while to use mobile payments. As of now, there is no outstanding reason to start using mobile money – no pressing problem this solution is addressing. And although some merchants are using mobile payment systems, right now it doesn’t seem the adoption is wide enough that consumers will really value from understanding and using this system.

One company using mobile money is Starbucks, which uses the My Starbucks Rewards program that, through their app, allows a customer to load a virtual card via PayPal payment and access the app from their mobile device to pay for product purchases. This program doubles as the loyalty program (reason!) and has a larger adoption rate that most applications. The app also includes other functions creating a full mobile version. As an alternative to the Starbucks app, Starbucks is also promoting the use of Square Wallet and allowing users to directly deduct purchases from their debit card.

3. Too exclusive. Another issue facing mobile payment options is the decision to provide a closed or open-loop solution. A closed-loop solution refers the the system like that of a store gift card. This means that someone can only load money onto the card and use it for goods or services from the company that issued. There is little regulation for this type of solution and consumers do not usually put large amounts of money onto those cards because they are limiting and do not provide the option to retrieve the unused amount as cash – there is a risk.

The open-loop solution provides consumers with a range of functionality, meaning that consumers aren’t restricted to using the solution only for the services or retailer who issued. A popular system is the smartcard payment system used in Hong Kong – the Octopus card. The open-loop solution has global reach and partnerships will retailers so the card has multiple uses and has real value.

Analysts are looking to a solution that could help catapult this payment option into real success and change the way we exchange funds. The solution could include an open network approach, or hybrid system, which would allow for global transactions and greater adoption.