Past, present and future of mobile payments research: A literature review

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Abstract

The mobile payment services markets are currently under transition with a history of numerous tried and failed solutions, and a future of promising but yet uncertain possibilities with potential new technology innovations. At this point of the development, we take a look at the current state of the mobile payment services market from a literature review perspective. We review prior literature on mobile payments, analyze the various factors that impact mobile payment services markets, and suggest directions for future research in this still emerging field. To facilitate the analysis of literature, we propose a framework of four contingency and five competitive force factors, and organize the mobile payment research under the proposed framework. Consumer perspective of mobile payments as well as technical security and trust are best covered by contemporary research. The impacts of social and cultural factors on mobile payments, as well as comparisons between mobile and traditional payment services are entirely uninvestigated issues. Most of the factors outlined by the framework have been addressed by exploratory and early phase studies.

Introduction

Mobile phones have transformed telephony profoundly. They are equipped with functionalities which surpass telephony needs, and which inspire the development of value-added mobile services, the use of mobile phones as access devices, and mobile commerce in general. The number of mobile phones in use far exceeds any other technical devices that could be used to market, sell, produce, or deliver products and services to consumers. These developments open lucrative opportunities to merchants and service providers.

Purchased products and services have to be paid for. Initially, fixed-line telephony billing systems were modified to charge mobile telephony. Later, mobile telephony billing systems were introduced, and used also to charge various mobile services when such services emerged. Yet, payments based on billing systems have several limitations. These include comparatively high payment transaction fees, merchant and service provider complaints about unfair revenue sharing, and the necessity to provision services to billing systems [66], [80]. In some areas, such as the European Union, credited payment services to third parties require a (limited) credit institution license. The lack of suitable payment instruments has for a long time been regarded as a factor that hampers the development of mobile commerce.

Mobile payments are payments for goods, services, and bills with a mobile device (such as a mobile phone, smart-phone, or personal digital assistant (PDA)) by taking advantage of wireless and other communication technologies. Mobile devices can be used in a variety of payment scenarios, such as payment for digital content (e.g., ring tones, logos, news, music, or games), tickets, parking fees and transport fares, or to access electronic payment services to pay bills and invoices. Payments for physical goods are also possible, both at vending and ticketing machines, and at manned point-of-sale (POS) terminals.

A mobile payment is carried out with a mobile payment instrument such a mobile credit card or a mobile wallet. In addition to pure mobile payment instruments, most electronic and many physical payment instruments have been mobilized. Furthermore, mobile payments, as all other payments, fall broadly into two categories: payments for daily purchases, and payments of bills (credited payments). For purchases, mobile payments complement or compete with cash, cheques, credit cards, and debit cards. For bills, mobile payments typically provide access to account-based payment instruments such as money transfers, Internet banking payments, direct debit assignments, or electronic invoice acceptance.

In the early 2000s, mobile payment services became a hot topic and remained so even after the burst of the Internet hype. Hundreds of mobile payment services, including access to electronic payments and Internet banking, were introduced all over the world. Strikingly many of these efforts failed. For example, most, if not all, of the dozens of mobile payment services available in EU countries and listed in the ePSO database in 2002 [5] have been discontinued. To facilitate the development of better mobile payment services, it is important to understand the lessons of this history by learning what previous studies have discovered about mobile payments and about the mobile payment services markets, as well as what issues have remained unanswered.

The aim of this paper is to summarize findings from past mobile payments research, and to suggest promising directions for future research. There are a number of factors that highlight the significance and usefulness of such a literature review. Firstly, the field has seen a growing number of publications, yet a thorough review of existing work is missing. The lack of published literature reviews impedes the progress in the field; review articles are critical to strengthening an area as a field of study [88]. Secondly, research so far seems fragmented, and lacks a roadmap or an agenda. Reviewing existing literature not only leads to a better understanding of the state of the research in the field, but it also discerns patterns in the development of the field itself. Finally, a synthesis of existing findings allows researchers not to repeat similar work, and discover important gaps. In other words, it closes areas where a plethora of research already exists, and at the same time uncovers those areas where research is lacking [88].

Another contribution of this literature review is the proposed theoretical framework, around which the review is organized. Webster and Watson [88] recommend that the best reviews need to be conceptually structured, and based on a guiding theory. Our framework provides a guiding structure that allows us to effectively accumulate knowledge, and to interpret previous findings. Because the framework itself aims to explain relevant factors in the mobile payment services market, basing the literature review on the framework ensures that the review is comprehensive and holistic, and reveals research gaps that could otherwise be overlooked. The framework not only helps to explain the existing body of knowledge on each factor of the framework, but, more importantly, it also provides an overview of the mobile payment services market, illustrating how the various perspectives and research findings fit together as part of the big picture.

Section snippets

Framework for the literature review

The framework used for the review of literature applies two guiding theories. They are the five forces model developed by Porter [68], and the generic contingency theory, which emerged from the work of Lawrence and Lorch [41], Perrow [67], and Thompson [81]. The framework is used to classify past research, to analyze research findings of classified studies, and to propose meaningful research questions for future research for each factor.

The prime actors in the mobile payment services market are

Research method

To determine the current state of and future directions for mobile payment research we conducted an extensive literature review. The first phase of the review was to determine the review scope and relevant source material. Since mobile payments are an interdisciplinary topic similar to electronic and mobile business, relevant articles are published in a wide variety of journals. Furthermore, mobile payment research is still an emerging research area and most of the contemporary research is

Descriptive findings

As the previous section explained, our literature search followed established procedures and criteria that ended up in the classification of 73 mobile payment publications. Fig. 2 reveals a number of papers that address topics within each of the framework’s factors. As a reminder, two of the reviewed papers addressed two factors in detail: one dealt with both Consumers and Merchants [83], and another one with both Consumers and Technological issues [91].

The classification in Fig. 2 shows that

Discussion and conclusions

This paper reviewed an extensive amount of existing mobile payment studies, proposed a conceptual framework with four contingency and five competitive factors for analyzing mobile payment research and markets, and outlined roadmaps for future research in nine specific research areas.

Fig. 4 below reflects the amount of research conducted in each factor of our framework. The black boxes indicate a factor where no previous research was found. The factors with less than 20 papers in each are marked

Acknowledgements

We would like to thank Rob Kauffman, Stamatis Karnouskos, Elaine Lawrence, and Key Pousttchi, the co-editors of the Mobile Payments special issue of Electronic Commerce Research and Applications, and the three anonymous reviewers for their helpful comments during the development of the paper. The work presented in this paper was partly supported by the National Competence Center in Research on Mobile Information and Communication Systems (NCCR MICS), a center supported by the Swiss National

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