The Question for Mobile Payments Isn’t When, But How

With Apple Pay launching in the UK in July 2015, followed by Android Pay’s recent arrival, it begs the question of when mobile payments will be the norm not novelty.

Insight and informed opinions abound. For example, TSYS found 29% of respondents to its 2016 UK Consumer Mobile Payment Study had used their smartphone to make a mobile payment in-store in the last month — only 3% were unaware of the capability.

Ben Woods, European editor of The Next Web, offered a more skeptical view earlier this month. He cited Transport for London’s figures, which saw contactless payments on its network rise to more than 25% of all journeys, but cards not phones made the vast majority. He said, “mobile payments are likely still trudging towards the mainstream,” and that mobile companies and retailers haven’t convinced “regular Joes and Janes,” to care.

Two opposing viewpoints — one of accelerating mobile payment adoption and the other suggesting to not believe the hype — and at a surface-level, they are both right.

It’s human nature to adopt anything that makes our lives better and our daily tasks easier, faster, cheaper and more enjoyable. Standing on a crowded platform on a cold, wet London morning, the last thing you want to do is scramble to unlock your phone and open your payment app, all while packing onboard like sardines. A much nicer option: neatly tuck your contactless card or Oyster card inside a glove — voilà, a hands-free contactless payment experience.

In the transit scenario, not only is paying by mobile slower and less convenient, users don’t get any added value for clearing these hurdles. There’s no Tube loyalty card. No reward. And to me, that’s the critical consideration in how quickly mobile payments will reach critical mass — it all depends on what else is in your mobile wallet.

Mobile Payment is the Least Important Part of a Mobile Wallet

Now don’t get me wrong. Getting more consumers to adopt mobile payment options can streamline experiences, offer a rich source of transactional information and save money on transaction fees. It’s very strategic; just ask Starbucks. But globally, both the capability and desire to pay using mobile devices will depend on what people get out of it.

What’s here and now in the UK, are mobile wallet apps pre-installed on every Android and iOS device (93% of the UK smartphone market). Android Pay and Apple Wallet allow users to save a brand’s coupons, loyalty cards, tickets and more. Plus, they provide dynamic engagement capabilities without having to build an app, such as changing wallet card content to a new offer, sending expiration alerts, updating loyalty balances/rewards and triggering cards to display on entry to a specific location, geofence or beacon zone.

Businesses that don’t have an app of their own can benefit from the ease of downloading mobile wallet items and low deletion rates, to dynamically update wallet contents and reach out with advanced app-like engagement capabilities to sustain customer engagement over time.

What Consumers Want in Their Mobile Wallets

According to Forrester Research, Inc.’s February 2015 report, “The Future of Mobile Wallets Lies Beyond Payments,” the top things US and EU7 consumers want in their mobile wallets are loyalty points/rewards and coupons/offers with mobile payment credentials coming in lower, as seen on the chart below.

Shopping’s Peas in a Pod: Mobile Wallets and Mobile Payments

The use of smartphones is already ingrained in the process of shopping, from pre-shopping research through to in-store excursions where product information, price checking, searching for digital coupons and pulling up loyalty cards are common practice. Globally, 85% of consumers have used their smartphones in-store — up from 72% a year ago (DigitasLBi’s 2015 Connected Commerce study).

With broader mobile wallet offerings that streamline shopper experiences, provide value and reward loyalty, the consumer’s decision to be able to apply these benefits and pay in one tap becomes a massive convenience. It offers the type of cyclical benefit that snowballs to drive widespread behavioural change required for something as fundamental as how we pay for things.

Swiping or tapping a credit card to pay isn’t difficult, and pulling out a phone to do the same isn’t easier, but by bringing together payments with customer-focused offers and rewards, Apple Wallet and Android Pay are poised to become a central hub for the shopping experience whether integrated into your brand’s app or standing alone.

It’s Early Days

We’re in midst of a sea change in how people use mobile devices to interact with the world and businesses around them. Marketers have a unique window of opportunity to deliver the type of mobile experiences that get noticed, drive action and ready their customers to fully replace their physical wallets with mobile ones.

Mobile payment adoption is poised for rapid growth, but the key in getting there is taking a customer-centric approach not a transaction-focused one.

Need some inspiration for what mobile wallets can mean to your customers and business? Check out our Mobile Wallet Inspiration Guide.

This post previously appeared on The Chartered Institute of Marketing’s blog.

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