As you’ve read in our previous posts, the immense growth of mobile doesn’t show signs of slowing down. Last week’s post, Mobile payment centers in on your customer needs, provides a clear view into the inevitability of mobile payments.
According to The Mobile Payments Market Guide,
Forrester’s mobile commerce forecast for Europe predicts that by 2017 as much as 30% of mobile users in EU7 (France, Italy, Germany, Spain, Netherlands, UK and Sweden) will carry out purchases via mobile devices…by 2017 the U.S. market alone will be spending US$90 billion via mobile. That’s a 48% compound annual growth rate over the US$12.8 billion that was spent in 2012.
What this reinforces is the notion that we referenced in this post: Evolution Retail: 3 Technology Trends that Keep the Customer Coming Back, that both online and the bricks and mortar experience must be combined in an Omni-channel experience that allow to have seamless experience across all online and offline vehicles. The impetus for mobile payments will reinforce and further enable the rise of the Omni-channel in response to the Always-on consumer.
Banks are struggling to keep up and enable their own mobile payments solutions. At the same time, disruptive technologies have burst onto the scene, bypassing traditional banking institutions and putting nascent capabilities into the merchant’s and customer’s hands NOW :
We can now make payments using smart-phone and other devices that can access the internet; we can pay by card using chip-and-PIN or contactless technology; and we can pay using an increasingly wide range of objects onto which we can pre-load funds such as cards, bracelets and key rings.
The time to hop on the bandwagon is now
As the same Mobile Payment Guide reports: merchants offering mobile payments is only “part of the value proposition” for the consumer. If you’re a retailer or QSR, there are certain things you should keep in mind as you venture into this new, but exciting realm.
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How mobile are your customers?
Going mobile needs to be a function of where your customers are headed. Analyze your web traffic and understand what percentage of traffic is attributed to the various devices: web, tablet, or mobile. Then analyze traffic against actual sales over time (by device) to determine the propensity towards mobile. This will immediately inform the path you need to take with respect to mobile payments.
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Ease of transition
The transition from physical credit cards to mobile payments must have the same seamless experience. Today’s customer will expect it. Ensure the solutions you are entertaining use verified payment processing technology that include major acquiring banks: Visa, MasterCard, American Express, Diners Club cards etc.
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Speed of transactions
As new mobile payment systems emerge, understanding the lag time between customer transaction and payment to retailer or QSR should be taken into consideration. While many payment systems are trying to optimize for transfer within 24 hours, there are solutions that may take up to 7 days to transfer.
Also consider whether merchants can issue refunds via the solution. Ideally, these transactions should be done within the same day.
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Compatibility
Given the rise of smartphones, mobile payment solutions should have the flexibility to operate among available mobile operating systems: including latest iOSiPhone, iPad iOS; Android; and Blackberry.
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Interchange Cost
One of the biggest considerations choosing a mobile payment solution is the cost bourne by you, the merchant, for processing each transaction. Once you’ve determined that there is significant benefit for your business to offer mobile payments, the you’ll need to be aware of the potential fees as a result. Since there is higher risk associated with card-not-present technologies, the cost per transaction will be higher than for traditional credit card transaction. This site provides some useful information on the difference between the two.
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Security
This is directly associated with the cost of processing. Mobile payments technologies are now attractive to potential fraudsters seeking to exploit customer’s transactions in order to “gain access to legitimate card acceptance”. Viable payment providers should provide guidance into their solutions for account and transaction monitoring, as well as risk mitigation for both you, the merchant, and your customers.
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Customer Experience
Mobile payments should be viewed as an evolution to the customer experience. In addition to reducing wait times and increasing efficiency, it also means keeping up with the expectations of the customer. Does your provider have the ability to seamlessly integrate into your existing infrastructure to augment existing customer information, and provide the necessary data to allow you to inform and improve customer experience? This point is further explained in #10 Data.
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Value Add: Loyalty and CRM
As mentioned previously, providing a cool payments solution for your customers is only “part of the value proposition”. We’ve alluded to the information now available to QSRs and retailers that provide the necessary intelligence to augment and add new life to existing loyalty and CRM programs. Payment programs that include options for loyalty solutions plus access to customer data through dashboards that are exportable for analysis, should be an important consideration.
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Simplicity
Put yourself in your customer’s shoes. Accessibility and convenience is paramount. I, as a customer, don’t want to have to swipe through all my apps on my phone to find the payment app. As we mentioned here, What is a Digital Wallet and Why is it Better than your App?, customer usage is critical. “….we’ve often repeated the statistics that 60% of all apps are deleted after the first try …if you’re considering building one you must take that into consideration. Imagine spending a lot of money and resources for an app. that just doesn’t stick.”
The digital wallet solutions provide both the accessibility and convenience for customer payment because users do not need to type in their card credentials. This moves significantly beyond chip and PIN solutions. They also provide the flexibility for both internet-based and bricks and mortar solutions. Now, more than ever, this simplicity gives further rise to impulse buying on tablet. And, as app solutions reach critical mass, the ease of detection provided by digital wallet make this option much more sustainable.
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Data Ownership
This is an important consideration when choosing a payments provider. The information aggregated from mobile is not only enormous, it’s also incredibly invaluable. There are mobile solutions that do not necessarily give you, the merchant, ownership to this information. It is aggregated with all other merchant data. Choose a provider that gives you ownership of this critical information. This will enable you to analyze customer behaviour: recency, frequency, purchase information: and provide you with contextual insights in optimizing customer experience and improving retention opportunities.
As mobile becomes more mainstay, the points mentioned above will become standard across mobile solutions. However, the early days of mobile payments will mean merchants will need to negotiate and challenge providers in enabling solutions with the end-customer in mind.
Contact us today to learn more about setting up your own customer mobile payment and loyalty program.
photo credit: Wikimedia.org cc
