On the surface, mobile payments would seem to be more of a much-hyped distraction for online merchants than a legitimate top priority. But while merchants may not need to jump on the bandwagon immediately, the innovations percolating in the mobile payment space deserve attention — and should cause some projects to move higher up the “must do” list.
Defined as portable technologies for enabling offline and online transactions digitally, without plastic cards, mobile payments are currently deployed by just a few well-known brands. The most visible and successful payment system belongs to Starbucks, which has offered a mobile app combining loyalty benefits and payments since 2011, allowing customers to pay for their morning caffeine fixes by scanning their phones at cash registers and earning points in the process. The company now claims that 16% of all in-store transactions are conducted using mobile devices and that mobile payments are growing 50% annually.
Of course, Starbucks isn’t the only merchant experimenting with mobile payments. In addition to the much-hyped debut of ApplePay late last year, mega-players Google and Amazon are both in the alternative-payments business, and Visa and Mastercard are both experimenting with payments that smooth transactions both on- and offline. Several major retailers, such as Walmart and Best Buy, are backing an independent effort called CurrentC. And there’s still Paypal, which remains the most widely-used alternate payment option for online transactions to date.
While to date just 3% of U.S. shoppers report accessing a mobile wallet in stores recently, sorting through the options is increasingly an imperative for merchants. As more and more merchants adopt mobile payment solutions and more and more consumers encounter and become familiar with the options, wider usage is only a matter of time. In fact, Forrester predicts that mobile payment adoption will grow exponentially, to 18 to 20% of consumers just three years from now.
To sort through the options, MarketLive founder Ken Burke offers this advice in “Merchants and the Race for Mobile Payments” in Retail Online Integration:
“2015 will be a year of profound experimentation and flux in the mobile payments arena. Retailers should consider several factors before deciding which providers to partner with, including the percentage of their customers using mobile devices. Those with brick-and-mortar stores need to consider that an increasing number of their customers will be expecting to not only interact with their mobile devices in-store, but be able to purchase goods through them as well.”
Whether or not merchants undertake a mobile payment integration in 2015, they can position themselves for smooth and swift adoption by optimizing their mobile experiences to the utmost. After all, the mobile payment solution doesn’t exist in a vacuum; merchants should prioritize key functionality that allows shoppers not only to check out quickly, but to take full advantage of brand offerings in the process.
As Burke writes in “Online Payments and their Effects on Mobile,” also in Retail Online Integration magazine,
“If consumers get used to buying music on iTunes or apps on Google Play with one click, they’ll expect the same experience in other mobile transactions. If their phones allow them with a single touch to buy a sandwich at Subway, how much patience will they have for m-commerce sites that take too long to load or don’t correctly adjust to the smaller mobile screen size? If they can buy a washing machine at Sears by scanning a barcode with their phone, how will they react in the frenzy of the holiday rush when an online retailer requires them to fill out multiple screens of personal, shipping and payment information on the fly?”
Beyond paying attention to essentials such as mobile site speed and checkout optimization, merchants should prime themselves for mobile payments by focusing on two key areas:
Loyalty programs. We’ve already noted the importance of a unified loyalty strategy for today’s maturing eCommerce marketplace. And with mobile payments on the horizon, the stakes are even higher: when consumers were asked what features they’d like to see in a mobile wallet, loyalty program integration was the top pick, with 57% of shoppers saying they’d want the ability to view their points balance and redeem rewards alongside mobile payments, Forrester found. Merchants can prime themselves for this future scenario by integrating rewards or loyalty programs with their online operations if they haven’t done so already — and prioritizing mobile functionality as the core of their offering.
Mobile coupon alerts and redemption. The ability to access digital coupons and promotions was second on consumers’ wish lists for mobile wallet functionality, according to Forrester. Add the fact that 55% of shoppers reported they’d use their phones in stores to redeem coupons during the 2014 holiday season and mobile coupons become a compelling proposition. In addition to considering whether to implement SMS deal alerts, merchants should integrate in-store redemption options into existing email and social campaigns using scannable barcodes or QR codes shoppers can snap using their phones and take to stores.
How is the prospect of mobile payments affecting your priorities?