The Trend Of The Future
“Pay by phone,” also known as proximity mobile payments, aren’t new. In fact, Japan introduced the first phone with mobile payments in 2004, and the technology soon found its way to nearly every device. Since then, other countries started experimenting with mobile payments, and with the release of Apple Pay and Google’s Android Pay, it appears that the trend is finally picking up in US markets.
In 2016, eMarketer estimates that mobile payments in the US will triple, with nearly 20% of smartphone users using the service sometime during this year.
This means that phone payments will account for nearly $27.5 Billion in 2016.
The infrastructure for successful mobile payments applications is beginning to fall into place. Retailers with old payment solutions need to update to comply with EMV “Chip” credit card technologies, presenting an opportunity to purchase a proximity mobile payment solution that accept both new forms of payment.
As consumers learn about this new technology, they’ll try to find stores that let them use it, creating a multi-billion dollar segment that most businesses cannot afford to ignore.
Security And The Appeal Of Mobile Payments
In 2013, Target became the latest in a growing number of stores that had their credit card databases hacked. They settled by paying customers $10 Million, but this breach reduced customer confidence. Unfortunately, this hack isn’t an isolated incident. As consumers shift to buying things with their credit cards, there’s a growing incentive for hackers to steal their data.
Popular proximity mobile payment solutions, like Apple Pay, protect customer data by using a “token” system. When a customer makes a purchase using their phone, instead of giving the store their credit card information, Apple generates a one-time token that authorizes the store to make a withdrawal for a specified amount.
This means that, even if the store has their servers hacked, the customer’s credit card number is safe because they didn’t give it to the company in the first place.
This means that mobile payment solutions are more convenient, and more secure than traditional credit cards or even cash.
Fortunately, most proximity mobile payments use the same technology, known as Near-Field Communication (NFC). This means that, as long as your vendor supports software standards, a credit card machine that accepts Apple Pay can easily handle Android or Samsung Pay.
Ideally the machines you upgrade to will support all systems out of the box, but if you have to choose, the safest bet right now is Apple Pay.
According to the North American Consumer Digital Payments Survey in 2015, nearly 68% of all mobile payments occur on Apple devices.
Offer Special Deals
The mobile platform has potential to expand your business and draw in new customers if used properly. Help your consumers make the transition from their physical wallet to a digital one by connecting other features of your business with their smartphones. Give your customers the full “wallet” experience by putting coupons, rewards, and loyalty programs in their hands.
Of the above respondents, 79% said they would be more inclined to make mobile payments if a retailer offered special discounts or pricing based on their usage.
53% would be motivated to make mobile payments if they received reward points for it.
One success story is Starbucks. With 20 percent of their in-store transactions coming from their mobile app, Starbucks has found a model and promotion that is catching on with their customers. The coffee retailer offers incentives inside its “mobile wallet,” such as the ability to earn drinks or occasional discounts.
Take Mobile Payments Online
If you’re an eCommerce retailer, or you sell items online in addition to your physical store, consider updating your website to accept mobile payments as well. Many popular payment solutions, such as Stripe,offer seamless Apple Pay integration.
This removes another potential point of frustration for customers, since they don’t have to re-enter their credit card information to purchase from you online, streamlining their purchase process.
By 2019, eMarketer predicts that mobile payment sales will generate more than $210 Billion in sales. Is your business optimized to take advantage of this lucrative technology?