Will Mobile Payments Take Hold In The American Market: Thoughts From Engage! Expo

Today’s Ypulse Youth Advisory Board post comes from Chase Straight who also made a stop by the Engage! Expo last week. Below Chase reports back on the number of mobile payment vendors and what this may mean for the monetization of tween/teen virtual worlds. As always, you can communicate directly with any member of the Ypulse Youth Advisory Board by emailing them at youthadvisoryboard at ypulse.com…or just leave a comment!

Will Mobile Payments Take Hold In The American Market: Thoughts From Engage Expo

Last week I ventured to my first ever industry conference with my company  in NYC. Engage Expo is THE virtual worlds conference of the year, and this time it was paired up with the storied Toy Fair at the Javits Center. There was a lot to see at the conference, but the most striking to me was the presence of mobile and alternative payment companies exhibiting.

It seemed like every other booth housed a mobile payment company creating an environment where Zong, Boku, Surfpin among others in the space spent the conference attempting to convince potential virtual world customers that mobile payments were the way to go.

To recap, mobile payments are an alternative method for purchasing virtual goods and subscriptions online when a lack of a bank account or credit card might inhibit teens’ and tweens’ ability to otherwise pay for virtual goods. With a mobile payment system, teens can just make the charge to their phone. The idea being that they get their goods quickly and easily [and potentially deal with the inevitable parental fallout later on when the phone bill is discovered].

The mobile payment system is already hugely popular in China with over 82.5 million users participating in 2009. Boasting the world’s largest population of cell phone users, China has been an early adopter of these payment systems, with Japan also seeing considerable growth in use.

As a country still resistant to the micro-transaction model, the United States has been slow to catch on to the trend. Cell phones are already widely popular here but thus far have yet to adopt this system on a large scale. The market is showing promise as mobile phone users are starting to utilize their mobile devices for online banking and for donating to causes like Haitian relief efforts. Will this translate to more mobile payments for virtual goods among teens and younger users? The companies exhibiting at Engage seem to think so.

We’ll see if this actually catches on in the US. I know that virtual worlds aimed at teens and tweens would love to find new ways to increase ease of payment, but whether or not the demographic adopts it has yet to be seen. According to a study from the Media Literacy Clearinghouse, 66% of kids age 8-18 own a cellphone, and it would be a logical, easier method for them to pay this way, but parental approval could still prove to be a whole ‘nother hurdle.

One of the reasons payment systems for teen and tween based virtual worlds provides a challenge is because parents are cautious about giving out their credit card information online. Will they feel better about mobile payments? The method is safer after all and with price points on some goods as low as $1, they might be more comfortable, but the recentness of the innovation and concerns over self-moderation may continue to keep parents’ wary of the benefits. While some of these services do offer prepaid limits set by parents or other parental controls, the likelihood of a parent looking into those details once again depends on the demand coming from their tweens and teens. Then again, some kids are likely to do it anyway and leave it up to Mom and Dad to figure out how much trouble a few dollars is really worth…that’s probably how I’d roll.

Sorta Related
Another alternative payment system: Kwedit, an honor system for buying virtual goods [Iconoculture]

About Chase

Chase works for a online community management and moderation company. He recently moved to Dallas, TX and serves as Head of Community for an online virtual world for kids. A former journalism major at the University of Utah, he wrote feature articles and album reviews for a music and art magazine. He is fascinated and constantly amazed with how children create and interact online. Aside from his work, Chase is an avid gamer, blogger, live music lover and audiophile who is obsessed with discovering new music and building his already extensive collection. Oh, and he really likes pandas.  (You can also find him blogging about virtual worlds on his company’s blog at metaversemodsquad.com/blog)