As we enter the New Year, mobile payments are in the spotlight more than ever - and for good reason. No other technology, marketing tactic or data analysis tool has afforded the opportunity that mobile payments do to engage consumers and drive incremental visits and purchases. With loyalty-focused mobile payment apps, businesses can understand and influence in-store buying behavior in a way never before possible. As a result, 2015 will see a mass scramble by many to launch mobile payment apps and enroll consumers in them. Buckle up we are in for an exciting ride. Here’s what you are likely to see along the way:
Retailers, restaurants and banks will assert themselves in mobile payments in response to third party wallets like Apple (News - Alert) Pay, Google Wallet and SoftCard.
Whether they look at it as half full, “mobile payments present a big opportunity for our brand,” or half empty, “we must avoid being disintermediated,” retailers, restaurants and banks will make significant moves to launch their own mobile payment apps to maintain and drive loyalty. The Starbucks app and the new Subway app are two examples of how first-mover restaurants are dramatically improving the way they service their customers by providing convenience and added value via mobile. Their apps are available to the large majority of their customers with their existing smartphones. They don’t require a specific device, at a specific location, using a specific type of point-of-sale system, so they are able to immediately establish valuable communication with their customers in this new channel.
Multiple mobile payment apps will exist. This is not a zero sum game.
While retailers, restaurants and banks are going to come out big in 2015 and beyond, their apps will ultimately co-exist with the strongest of the third party wallets that manage to enroll consumers and get repeat purchases at the locations where their payments are accepted. Just as there are many credit, debit, private label and gift cards, as well as loyalty programs today, the mobile payment space will be similar. The average American is carrying four or five cards in her wallet today and chooses to use cards because of the loyalty incentives received: discounts, points, free products, miles, cash back and more. In the mobile paradigm, the mobile device will be the wallet and multiple mobile payment apps will be installed there to use at the right place, for the right purchase – at a touch of the screen.
NFC has been revived for now, but its applications will be limited.
Apple Pay breathed new life into NFC for some mobile payments, but NFC technology is not where the most value is for consumers, nor for retailers, restaurants and banks. It is a great unitasker: doing one specific thing very, very well (in this case, sending a single debit or credit transaction), but it is difficult to find other useful tasks for it. With technologies like Bluetooth Low Energy and quick response codes, it is possible to execute multiple transactions – redeem an offer and/or reward, earn loyalty points, make a split tender purchase across two or more payment instruments – in one easy transaction. Once you know that, it quickly sounds unappealing and difficult to have to toggle between apps; scan a separate coupon, loyalty and/or gift card; and then transmit only a payment via NFC without being able to split the purchase among debit or credit cards, and certainly not among private label cards.
More transactions will happen away from traditional point-of-sale systems.
In this space, mobile technology is not just enabling a simple shift from plastic to mobile. In some cases, it is transforming the entire purchase experience. A few good examples of that are mobile-based ride- sharing services, quick service mobile ordering and retailer clienteling. In this new world, consumers will spend less time waiting and more time engaging with the brands that value their time and business to deliver this superior service.
What lies ahead is a once in a generation opportunity to improve the way consumers shop for, pay for and connect with the products, services and brands they like. The coming year will bring more mobile payment and loyalty apps, more enrolled consumers and more ways to understand and engage with them. Are merchants and banks ready? We’ll find out.
About the Author: Chris is a frequent industry speaker and press source on the topic of mobile payments and wallets. His background spans a variety of technology areas including mobile payments and marketing, e-billing and payments, digital media and customer self-service. Paydiant, which he co-founded in 2010, offers a white label mobile wallet platform that includes payments, loyalty, offers, ATM cardless cash access and related commerce services to merchants and banks.
Edited by Maurice Nagle
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