If consumers are reticent to make purchases with their phones, they certainly haven’t been demonstrating it this week. After the horrible earthquake in Haiti on Tuesday, individuals around the globe have been trying to donate money to relief efforts. The response has been generally impressive, but most surprising has been the outpouring that has been delivered via mobile phones.
Over $4 million have been donated to the Red Cross in the last three days via mobile phones. That’s good news for Haitians, and also a big win for those in the mobile payment space.
When it comes to mobile payments, Americans have been slow to adopt the trend. A lack of urgency keeps people from using their phones for purchases. In addition to the security risks and fears of using a new medium, something like a new pair of shoes or a
The proliferation of applications on smartphones has made consumers more comfortable with sending a few dollars by tapping on their phones, but it looks like charity has been the tipping out When an entire country is in need, individuals are a lot more comfortable using mobile payment technology.
In addition, mobile phone carriers simplifying the process of phone payments. Any consumers who wanted to donate money to the Red Cross can do so this week by texting HAITI to the number 90999. Phone carriers have eliminated the need for credit card numbers by automatically adding a $10 payment to users’ statements this month. In addition, the texts are concise and The Red Cross put in a series of queries to ensure that phone users intentionally tried to donate $10 to the relief project.
Meanwhile, Wyclef Jean’s
nonprofit organization, Yele Haiti, raised over $1 million this week for Haiti
victims. Wyclef sent a series of tweets asking for donations, appeared on CNN and enlisted his famous friends to mobilize people to donate $5 to the cause by texted YELE to 501501. Meanwhile, a company called Single Touch is working with AT&T to let subscribers pay $25 to the charity of their choice by dialing the number 505.
But all of the mobile successes don’t overrule the security concerns surrounding mobile payments. Card fraud continues to cost payment companies in the U.S. an estimated $8.6 billion a year, according to a report released this week by Aite Group. And even when people are spending money for altruistic reason, or maybe especially then, there is plenty of room for abuse.
As CNET notes, the Haiti relief efforts have been riddled with consumer fraud. Sandra Miniutti, director of marketing for Charity Navigator, tells the pub that mobile donations aren’t ready for primetime:
“With all the social media–Facebook, Twitter, all these types of
giving online–charities aren’t really seeing a ton of revenue flowing
through them just yet,” Miniutti said. “At the end of the day,
probably, the best bet is to go to the charity’s Web site or to go to a
site like Network for Good.”
Even corporations themselves have dealt with scams this week. According to AdAge, both UPS and American Airlines found out they had created generous — and false — donations programs via Twitter this week and had to work quickly to remedy the situation.
But despite the precautions that people will learn to take before making mobile donations, donating to a good cause via mobile has proven to be a great way to test the waters on a new payment method that they may not have tried otherwise. Especially because you don’t need a smartphone to do it. And without a cause like this to rally around, many consumers may not have learned about mobile payments for a long time.