• Trends for 2014: Mobile Payment Technology Dec 30, 2013
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    With 2014 just around the corner, I thought I'd do a little crystal ball gazing as to what technology trends we may expect to see enter the mainstream in the coming year (or years) ahead. One technology that is starting to gain momentum - albeit with some consumer resistance - is Mobile Payments; the ability to pay for Goods using your Smartphone. Originally covered in the Onestop eCommerce blog, it seemed a could time to raise the topic here as I do feel that we will see Mobile Payments enter mainstream in the next couple of years.

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    Mobile commerce, or shopping online with your smartphone, has been possible for a while but the idea of paying for goods and services with your mobile phone is likely to gain widespread attention amongst retailers and consumers in 2014. Why ? Simply that 2013 saw a number of entrants, supported by entrepreneurial investors, begin a marketing onslaught to push the concept of cashless payments to retailers and the media. The opportunity for major retailers to pioneer the technology is simply one they cannot afford to miss if they are to gain the edge over the competitors in engaging with their customers.

    THE CONSUMER

    So, are there any advantages to the consumer in using mobile payment technology and if so what are they ? Certainly, there is a trend away from carrying cash. Cashless payments have the advantage that consumers don’t have to worry about having enough cash on them and certainly seem naturally inclined to pay in-store using cashless payments, currently of course via debit/credit card. However, the consumer with the most to gain from cashless payment systems is, we suspect, the younger generation.

    Mobile payment technologies have a level of sophistication that credit cards cannot match. PayPal’s Mobile App solution, Payment Code, for example, will allow customers to redeem any special offers, merchant rewards or other credits that might be saved in their PayPal wallet at the point of transaction. Other examples include Starbucks who worked with Square.com to implement an App. allowing Starbuck customers to buy their coffee using their smartphone.

    As with any paradigm shift, it is the ability of the technology to hide the complexities of the underlying system from end users that leads to wide spread adoption. For mobile payments, the simplicity to the end-user of scanning QR Codes to allow payment is an easy win, especially for the younger generation who already Mobile and App. savvy. Trust and security are also key factors in giving consumers confidence to avoid the need to carry cash in favour of cashless payment methods although, the sheer novelty or feeling in control of their choices may be the tipping point which leads consumers to utilising mobile payment technologies.

    If you think payments by mobile phone are unlikely to receive widespread adoption, a recent article by Mobile Payments Today reported that 25% of (U.S.A. based) consumers had made payment by mobile phone, while 18% had scanned a QR code to make a payment. Here in the UK, the Centre for Economic and Business Research (CERC) predicts that 20 million adults will use their mobiles to pay for goods and services by 2020, with the value of purchases tripling from current levels to £14.2bn in 2018.

    BARRIERS TO ADOPTION

    On their part, retailers need to offer incentives to consumers to adopt the technology. Loyalty programs, promotions and the ability to offer other value-added services are all possible ways to build relationships with consumers. And we suspect this is where Paypal have a major advantage over other mobile wallet and cash payment providers. They have the reach, brand and financial incentive to provide retailers with the software, support and consumer friendly Mobile Apps, allowing retailers to integrate cashless payments by mobile phone with their existing POS systems.

    As mentioned above, the other hurdle most cited by consumers is the question of security in using mobile phones for making payments. As reported in a recent YouGov article over half (56%) of users do not believe the technology is secure. This is similar to the scenario seen with online shopping 4-5 years ago where people were reluctant to provide credit card details when buying goods online through eCommerce websites. Of course, now the position has changed dramatically. There is certainly work required on the part of mobile payment providers to both ensure their systems are truly secure and to educate users in securing their ‘phones. However, mobile security is a challenge that we believe will be addressed in time, much as it has been for eCommerce generally.


    Whatever the final outcome for NFC or QR Codes, mobile technology is certainly the forerunner for changing the way we shop in store and online.

    If this has piqued your interest, you can read the full blog on the Onestop eCommerce blog: just search for Mobile Payments using the search feature.
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