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What’s the future for mobile payment?

by Tim Spenny , 30.07.2015

You’re in the department store. Your basket is nearly full. There’s just one last pair of pants to look at. And what’s that? A coupon for the pants you’re considering buying pops up on your phone.

Bargain!

The pants are coming with you. And it’s time to go. You wave your phone at the checkout to pay for your purchase and you’re out the door.

That was easy!

And the kicker, you’ve earned loyalty points for everything you’ve bought. You head home, mission accomplished.

This is the future of shopping as Mobile Payments go mainstream. With the launch of Apple Pay, NFC (Near Field Communication) is quickly becoming the Mobile Payments platform of choice. Brands, retailers, cell phone providers, technology companies and payment providers are lining up around the block to get on board.

 

Graphic_The_future_for_mobile_payment_II

The advent and eventual adoption of micro-geographical tracking and geo-fencing, technologies has allowed retailers to serve discounts to your phone at the point of sale, owning the where will become the norm for marketers. Imagine Tinder for coupons. You’ll open an app and browse offers based on your micro-location. It’s a win-win for retailers and consumers – highly targeted marketing to a captive audience as far as retailers are concerned, and offers that you can use right here, right now.

This, of course, is great for retailers. They can track shopper movements and marketing ROI in more granular ways than ever before. And it should be great for consumers. The “personal and exclusive” discount is just the sort of nudge that will help consumers to continue to adopt Mobile Payments. Incentivizing to change payment behavior is, after all, tried and tested. Credit cards have been keeping our business for years with the offer of airline miles. Technology enables consumer benefits and consumers enable the technology. Everyone wins.

But here’s where things get sticky. Just like any other new technology, Mobile Payments are only going to really pay off if consumers think it’s better than their established behaviors and experience.

The value proposition of using coupons and paying with your phone will have to beat searching in your wallet for cards and coupons. And Mobile Payments will need to have an engaging seamless experience at the point of sale, as not everyone is in a hurry to get rid of their wallets or purses. Consider women, who typically do the bulk of the shopping. Most women’s wallets sit happily in the handbags that they carry everywhere (see Women and Mobile Payments for more on this).

Ultimately, whether or not Mobile Payments keep consumers happy will hinge on whether the big players are able to play nicely with each other. If they do, Mobile Payments will be a boost for both retailers and consumers. The American Express “Plenti” program shows that big brands are starting to see the potential in partnering to reward customers regardless of how and where they pay.

On the other hand, Mobile Payments could become a messy land-grab, with retailers favoring brand-exclusive Mobile Payment systems, cell phone providers offering their own platforms and payments and technology companies competing for a slice of the mobile wallet. All of which, will make life much more complicated for consumers and hinder the experience and ultimately the value proposition of Mobile Payments.

Imagine yourself again at the department store checkout.

You’re precariously balancing your basket.

You’re minding your toddler who is eyeing up the candy.

And you have to swipe through nine different brand apps to find the right one for this store.

This could be the future of Mobile Payments.

Is it really better than a good old-fashioned wallet or purse?

Tim Spenny is Vice President of GfK’s Financial Services team in North America, specializing in Mobile Payments and FinTech. He can be reached at tim.spenny@gfk.com.

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