Managment Information Systems. W2 EXC. CH6.
Read the following Case Study and then, answer the fourquestions at the end in an essay:
Case Study:
Mobile Payments and the Digital Wallet.
In a country where cash is king and almost everyone owns acell phone, Japans NTT Docomo led a major drive into mobile payments andm-commerce. The mobile phone carrier pioneered the use of near fieldcommunication (NFC) chips inside its cell phones, enabling them to exchangedata wirelessly over a few centimeters. More than 65 million people subscribeto Docomos wireless voice network, and they can all pay for their cappuccinosat participating stores by tapping their cell phone against a special terminalor just waving it nearby.
When a customer taps the cell phone to pay, the expense isautomatically logged into a digital expense report and charged to thecustomers account. Called osaifu keitai in Japanese, the cell-phone walletfrees people from carrying cash. Consumers use their cellphone wallets to buysubway, train, and airline tickets, and the phones chip also serves as anelectronic key to control access to buildings and homes. Cellphone walletholders can check their balances, loyalty points, and purchasing history fromthe handset and receive promotional discounts.
In the United States, mobile payments have been slow to takeoff, partly because credit cards are so popular and also trusted. The creditcard industry builds in essential safeguards against fraud and also offersincentives such as cash advances, frequent flier miles, or reward points.Switching to mobile payments would be a major change in customer behavior. Atmost restaurants, you would need to hand over your smartphone to the serverinstead of offering a credit card because Apple Pay and other major playersrely on NFC technology.
While Apple is a major player in the mobile paymentindustry, the company has had some slip-ups that make customers wary. Whilewaiting for his tech support appointment at a New York Apple store, onecustomer decided to purchase some headphones. He used the Apple app to scan thebarcode and charged the purchase to his iTunes account. Later, when he startedto leave with his headphones in a bag, an employee asked to see a receipt. Helocated the app on his smartphone but then found the transaction had notcompleted. Instead of letting him click the last button to confirm, the clerkcalled the police, and the customer was arrested for shoplifting.
In Japan, NTT Docomo had to take over a bank to build itsosaifu keitai services so it would have the financial backbone to actuallyhandle electronic payments. In the United States, though, the credit cardcompanies or other well-established payment services, such as PayPal, arelikely to be major players or partners.
Consumers will need more incentives to try out any of thesenew services, and they must develop the kind of trust they already have incredit cards, debit cards, checks, and cash. Convenience is one incentive, butcreative retailers can tap other features that tie mobile phones to purchasing.Teen clothing chain Aeropostale, for instance, offered an app that letcustomers choose what music the store would play. The teens hung around thestore for 30 minutes or more to hear their selection. The long wait offeredplenty of time to shop, and the company learned a great deal about itscustomers music preferences.
As mobile payment experiments play out and technologies likeNFC become more widespread, those lines at checkout counters may get shorterand shorter. Leather wallets stuffed with credit cards, loyalty cards, photos,and cash may become extinct.
Questions to answer:
-What are the potential benefits of this technology for consumers? What are thepotential benefits for retailers?
-What are the risks for consumers and retailers? What aresome ways that these risks could be overcome?
-How could this technology affect the telecommunications andconsumer banking industries?
-Do you believe this technology would work in the UnitedStates? Why or why not?
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