Mobile Payments a Competitive Advantage for Uber

I have been arguing for the past two years that despite security concerns and an apparent lack of interest in mobile payments at the "national" level, consumers immediately "get it" when they find mobile payments embedded in a context whose value is self-evident. One such context is transportation.

There's been a great deal written about the disruptive impact of services such as Uber and Lyft on traditional taxis and transportation. The cheaper Uber X service, utilizing part-time drivers, is on average less expensive than conventional cabs. But I had an interesting experience recently that clearly reflected the power and value of mobile payments (convenience rather than cost) as a competitive differentiator.

The other day I got off a train from San Francisco to the East Bay where I live. At the bottom of the escalators were three taxis lined up and waiting for fares. I could have taken one immediately. Instead I pulled out my phone and called Uber X -- because I knew I wouldn't have to pay with cash or do a credit card transaction when I got out of the cab. (Uber stores credit card information and provides receipts via email.) I also appreciate the fact that I don't have to calculate and include an additional amount for a tip with Uber X.

The convience of not having to engage in a payment transaction was the consideration that made me wait five minutes rather than just get in a cab at the station. My own experience showed me the power of mobile payments as a differentiator and loyalty feature. The same will likely prove true for OpenTable as it rolls out mobile payments, giving consumers an additional reason to use the service, along with loyalty points and online reservations. 

Eventually mobile payments in the form of stored credit cards will make their way into most apps -- especially if Apple enables "pay with iTunes." For now, developers and publishers that integrate early will reap competitive advantages over those that do not.