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Still Undecided on Mobile Payments?

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Posted: Oct 13, 2015 | By: cathyplumb

More and more retailers are using payments through mobile phones. If you’re not on board, you probably should be considering it.

Some of the hesitation to adopt this has been caused by lack of understanding of just how mobile payments work. One common misconception held by both retailer and consumer is that mobile payment systems directly access your bank account credit card number and transmit it wirelessly from your phone to an NFC (near-field communications) terminal. But that’s not the case.

Apple Pay and Google Wallet (aka Android Pay, which comes out in another month or so) use tokenized payment systems, so your card numbers are never transmitted. Tokenization transforms your credit card information into a new randomly generated number (the token). That number is sent back to Apple, which programs it into the phone. This means that the number stored on the phone can’t be cloned into anything would-be thieves consider valuable, plus it can be easily deactivated and replaced with another number.

Your bank information is locked down and meaningless to fraudsters. Using a tokenized account also can make it easier to check out, as many apps will link directly to your stored shipping information.

Most shoppers often have a lot of gift cards, loyalty cards and coupons, which can become cumbersome to remember to carry around. Combining those, as well as ID and having an option for paper receipts, into a mobile wallet will help make mobile payments worthwhile, since part of the appeal of mobile payments is the ability to cut the cord between the payment terminal and wallet.

Another advantage of mobile wallets: Retailers can offer savings and promotions. If mobile payments can help shoppers save money, they may develop more loyalty to particular stores. As this technology expands, it could provide consumers with seamless access to coupons, pop-up deals and rebates. Retailers have the opportunity to gain more sales and loyalty.

A common struggle for small retailers is tracking inventory and customer behavior. But with mobile payment services, you can automate these processes and better serve your customers.

Some mobile payment companies charge less per transaction than credit card companies, which equates to direct savings for the business. Since each company structures payments differently, retailers are advised to investigate different mobile payment programs to determine which is most cost-effective for their store.

Blackhawk Networks recently published “Where It’s At: A Connected Shopper Study,” in which it cited 59% of consumers would consider allowing retailers to know where they are in-store (via beacon technology) in exchange for exclusive values and savings.

Another future use for mobile payments is being able to capture all the paper in a customer’s wallet, including paper receipts. Accenture reports that more than half of those who currently make mobile payments said they would pay by phone more often if they could track receipts, were offered instant coupons, or could store reward points on their phone.

Blackhawk Networks’ research shows that 54% of shoppers would likely use a mobile wallet over a traditional wallet if it were accepted everywhere. So stores who haven’t adopted the new technology may be missing out and the ones who do offer a reliable platform with expandable options are best positioned for future growth in this category.

Retailers must not only communicate the benefits of mobile payments to customers, but they must make the technology more tangible and relatable by making the features of mobile payments clear. Doing so will help put the technology, along with its corresponding benefits, into context for shoppers and help promote adoption.

Mobile payment systems add a layer of security and convenience to the process of paying for goods. Making the most out of those systems will not only ensure that they enjoy a long and successful life, it will also help prevent the consumer from fraud, due to insecure payment systems. 

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