This post is by Tim Spenny, Vice President of GfK's Financial Services team in North America, specializing in Mobile Payments and FinTech.
The ability of Mobile Payments to keep consumers happy hinges on whether the big players will play nicely together. If they do, Mobile Payments will be a boost for both retailers and consumers. If they don't, Mobile Payments could become a messy land-grab, with retailers favoring brand-exclusive Mobile Payment systems and making life much more complicated for consumers.
Picture this: 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 discount for it pops up on your phone. Bargain! The trousers are coming with you. And it's time to go. You wave your phone at the checkout – that was easy! – and everything's paid for. Loyalty points rack up for everything you've bought. And you head home, mission accomplished.
This could well be what shopping looks like in the near future, as Mobile Payments go mainstream. With the launch of Apple Pay, NFC (Near Field Communication) will become the Mobile Payment platform of choice. Brands, retailers, technology companies and payment providers are queueing round the block to get on board.
Meanwhile, Google is introducing micro-geographical tracking and major players are thinking of introducing geo-fencing – technologies that will allow retailers to serve discounts to your phone at the point of sale. 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 as a consumer can use right here, right now.
This, of course, is great for retailers. They can track shopper movements and ROI in more granular ways than ever before. And it should be great for consumers. The "exclusive" discount is just the sort of nudge they need to adopt Mobile Payment. Incentivizing to change payment behavior is, after all, tried and tested. Credit cards have been keeping our business for years with the promise of air miles. It's what I like to call "closing the loop". 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 Payment is only going to really pay off if consumers think it's better than the alternatives.
It will have to beat searching in your wallet for cards and coupons. And Mobile Payments at the POS will need to offer more rewards besides, as not everyone is in a hurry to get rid of their wallets or purses. Consider women. Most women's purses sit happily in the handbags that they carry everywhere.
Ultimately, whether or not Mobile Payments keep consumers happy will hinge on whether the big players play nicely together. 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 of rewarding the customer 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 and making life much more complicated for consumers.
Imagine yourself back at that department store checkout. You're suffering in the heat. You're precariously balancing your basket. You're minding your toddler who is eyeing up the chocolate display. And you have to swipe through nine different brand apps to find the right one for this store. This could also be the future of Mobile Payments. Is it really better than a good old-fashioned wallet or purse?