5% - this is the percentage of all payments made globally, in a store, using a mobile device last year. So, why should anyone care? Put simply, in-store mobile payments are the future. Yes, there are barriers – logistics and security are the main ones – but there are also opportunities for businesses and consumers. Mobile payments will offer a faster and more convenient way to pay on a daily basis. It will also create a more innovative rewards system than is currently offered by the cards that we carry with us every day. There are, however, a number of hurdles on the path to widespread adoption.
There are a number of barriers that need to be overcome before mobile payments are the norm. One of these challenges is logistics. This problem can be broken down into three parts:
Almost anything published on mobile payments will highlight security as the main barrier to the widespread adoption of this technology. But, security has always been and will always be an issue when an individual parts ways with personal information and money. And, while it cannot be ignored, it can be overcome.
Establishing trust is vital to alleviating concerns about data protection and financial loss that surround mobile payments. Beyond legislation designed to protect consumers, companies across all sectors must demonstrate that this is a safe way to pay. Part of that trust comes from the current financial reliance that consumers have on banks and credit card companies. Security options such as passwords and biometric authentication will also provide reassurance. However, technology and financial organisations need to go a step further by offering consumers control over what they opt into. Ultimately though, it may be consumer curiosity and convenience that supersedes security concerns.
In October 2014, 29% of US consumers said that they intended to make a mobile payment in store in the next 12 months, and, 33% thought it was faster to pay this way. Convenience and speed are big advantages and consumers may start to worry less when presented with an easier payment method that is underpinned by brands they trust. That said, convenience is not enough to support the argument that in-store mobile payments will be a way of life. Consumers already have card options that are both easy and quick to use. Mobile payments, however, has an advantage over cash and cards, which is that it can interact with the consumer.
Rewards, loyalty schemes and instant discounts are what consumers will gain from mobile payments. Retailers could offer consumers discounts when they are in or nearby a store using the individual’s location. Alternatively, if a retailer knows a consumer has been browsing for something online, they could text them a discount code to use in store or alert them to a deal through an app. Furthermore, mobile payments will eliminate the need for paper coupons and plastic reward cards. Beyond instant discounts and convenience, consumers also have the option to cap and monitor spending.
While there are logistical and security barriers to overcome, mobile payments will revolutionize the way consumers, retailers, financial institutions and technology companies interact. As consumers get to grips with the technology and understand how it benefits them and as companies increasingly see the opportunity to profit, mobile payments will become widely accepted and will ultimately replace cash and cards.
All data from the GfK 2014 FutureBuy Study. The 2015 FutureBuy Study will be available in the Autumn of 2015.
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