Personalize the payments process to increase comfort, protect accounts and make mobile use simpler and secure.
Originally published in Facts, Figures & the Future.
The surge of smartphone owners in the U.S. makes it seem inevitable that conventional checkout processes will yield to new payment methods for large swaths of American shoppers.
Some 65% of TV-owning households in the U.S. have at least one smartphone in 2014, up from 44% in 2011 and 19% in 2009, reports Nielsen. With tablets also in 29% of U.S. homes, up from 5% in 2011, retailers feel mounting pressure to develop mobile strategies to enable consumers to easily research, shop and pay for purchases.
The race is on to provide mobile payments – forecast by Juniper Research to reach $110 billion globally in 2017. Forrester says the U.S. figure could reach $90 billion in 2017 – that’s a 48% compound annual growth rate over the $12.8 billion of 2012.
F3 feels Apple will win a big slice of this market for two reasons: First, it stands apart as a purveyor of ease and fun. If Apple makes mobile payments easy and fun too – and people gain confidence their accounts can be safe using near-field communications – we feel Americans will adopt this technology.
Second, Apple has a database of 800 million iTune customers, many with their credit card information, and many who already use Apple’s Touch ID fingerprint reader to make purchases. If the soon-to-be-released iPhone 6 has an NFC chip, which some analysts believe is true, notes The Christian Science Monitor, then “it’s simply a matter of getting merchants to install NFC-enabled registers.”
Meanwhile, vast inroads by Uber in the transportation space make people comfortable with their drivers (see photos of vetted drivers and their customer ratings before they arrive) and the cashless payments process (customers can pay via a credit card on file, PayPal, GoogleWallet, or Uber Credits).
Uber has also brought fun to its fans with a special ice cream giveaway (see #UberIceCream and Will Uber Challenge Google?). And for one month it is testing Uber Corner Store for home delivery of limited retail products – to potentially compete with Amazon and Google same-day delivery services.
Imagine the next personalization step for food stores and eateries to connect to customers. How about enabling mobile-paying customers to see a proprietor’s picture, food and service scores, trending menu items, and more on their screen?
Retailers able to accept mobile payments would gain in several key ways: First, they may sidestep much of today’s 2% swipe fees for credit-card transactions. Second, they could increase personalization and derive other relationship benefits from mobile-toting shoppers. Third, they’ll appeal more to the nation’s fast-growing numbers of smartphone owners, many of whom will eventually trust processes enough to pay by mobile. According to Nielsen, 2014 marks the first time “a majority of U.S. mobile subscribers of all age groups own smartphones. In fact, 51% of mobile owners over the age of 55 now own smartphones, up 10% from Q1 2013, driving the growth in smartphone penetration to 70% of Americans overall.”
The two-year-old Merchant Customer Exchange is developing a mobile commerce platform to compete with others such as Google. Among MCE’s participating merchants: Walmart, Sam’s Club, Meijer, Publix, 7-Eleven, Hy-Vee, Price-Rite, ShopRite and Target.