Being Ready The Future of Mobile Payments

Mass adoption of smart, connected and mobile devices globally has been transforming consumer behavior and dramatically evolving shopping experiences. Every device is now a commerce device. In fact, Juniper Research estimates that by 2015, an overwhelming 2.5 billion consumers globally will buy digital goods via mobile devices.

Getting there has been a challenge for all those involved since consumers find some forms of mobile payment technology difficult, and some merchants lack the expertise and resources to make mobile payments a reality. This is in spite of the fact that 51 % of merchants have made attempts at mobile payments and checkout, making it a top priority for 2013. (Forrester)

Yes, prominent merchants such as Starbucks are beginning to implement mobile payment technology to cater to their customer’s needs. However, we need to take this to the next level by making the mobile payment experience better across thousands of merchants, different consumers, different products and/or different shopping experiences.

One possible answer lies in MasterCard’s latest service, MasterPass. “a digital service that allows consumers to use any type of payment card or enabled device to shop from anywhere—by click, tap, or touch.“

To stay relevant, and best serve merchants and consumers, convenience, scalability and security must be a priority. The more we can make shopping a pleasant experience, the better positioned we’ll be to help change the face of shopping. To quote the late Steve Jobs for the iPad 2, “we must deliver technology that gets out of the way”.

Other global leaders in innovation that cannot be ignored include Google, Apple, Amazon and PayPal. These companies have also been actively expanding their mobile payment offerings. Some are even currently setting up new business models for mobile payments.

Many of these players can point to a relatively loyal clientele that run into the triple-digit millions globally, online and via mobile. New providers of mobile or Web-based financial services need to integrate changing patterns of consumption and digital behavior.

As a group, online retailers are currently seeing higher sales growth than traditional retailers. In addition, the ever-increasing share of mobile devices results in a higher number of consumers making purchases while on the road. Companies that can successfully incorporate mobile payment options into their online and offline channels will be more attractive to consumers in the years ahead.

Adoption of Payment Technologies

Although customers drive the need, merchants still play a crucial role with respect to the adoption of new payment technologies. On the Internet, things are far easier as changeover costs tend to be lower.

Some potential benefits for merchants include:

• New systems that add value by channeling additional information
• Increased potential for customer loyalty
• Improved reporting and real-time analysis of client purchases
• Operating costs and processing time

Innovative payment systems will be benchmarked against existing systems for factors such as system stability, execution and operating costs. In the medium term, payment service providers might compete by lowering fees.

Although benefits from new payments solutions are important, a merchant’s first priority still lies with customer expectation and their ability to include innovative mobile solutions in the future.

So what should companies do?

1. Look at needs around money, not the transaction.

Companies should be looking at their customers’ needs and how their product fits into that consumer’s life. Focusing on how to facilitate the transaction with technology is not the issue here.

Money is hugely important for many reasons. It allows people to get involved in the things they care about. It also allows them to take care of their families, which has nothing to do with the point of sale.

Merchants have needs too. They need to be in control of their business and know whether their marketing efforts are effective or not. Merchants want to know what brings people through the door, and what keeps them from going online. They want to see where they stand in the market, and how they can improve.

Any solution should focus first on solving the needs people have on both sides of the transaction.

2. Look to the extremes.

The initial exploration of how to approach payments needs to start wide. By talking to people with extreme digital and mobile behaviors, or those who are early adopters, merchants can get a sneak peak into the future.

3. Generate solutions with a hybrid approach.

Inspired intuition and creativity is the path to the future here. Surveys are great for validating existing theories, but will never generate disruptive insight. Look to methods such as Eric Ries’ Lean Startup or Brant Cooper’s Customer Development. Through a combination of these approaches, players looking to tackle mobile payments will be able to create solutions that are both innovative and meaningful, to both consumers and businesses.

Your mobile transaction is only one small part of an experience that your end consumer has within their relationships and their lives. Ultimately, the leading commerce companies in the digital world will have to keep this as front and center in the development of their service and ecosystem.