Factors Driving Customer Adoption of Mobile Payments [payCLT Event in Charlotte]

As the series of payCLT events in Charlotte continue to roll out, another one was held on March 4, which covered adoption of mobile payments adoption, a discussion led by Chuck Winter of North Highland.

The use of traditional payment methods – cash, checks and credit cards – are on the decline. By 2017, alternative payments will account for 59% of all transaction methods. Important insights on the shift in mobile payments were shared during the event, emphasizing the decline of traditional payment methods and factors contributing to the adoption of mobile payments.

The card payment market share (including debit and credit) is projected to decline from 57% in 2012 to 41% in 2017. Alternative payment methods like e-wallets and CurrentC, along with mobile payment options like Walmart Pay and Target Pay, are capturing this market share but not at the same exponential rate they are being introduced at (six new e-wallets and more than six new mobile payment apps in just the past year).

Adoption is trailing not due to limited customer awareness, but because of inconsistent and fragmented acceptance and use. Merchants are contributing to the confusion by racing to be the first with shiny new objects to capture consumers’ attention.

The Impact of Diverse Payment Options

Consumers are looking for an easy, personalized, informative and convenient experience. They demand support, service, security and an appreciation for their loyalty. Delivering on those demands has widespread enterprise implications across sales, services, fulfillment and customer service.

Finalizing payment must become an extension of customer experience, providing customers with accurate, easy to understand information that allows them to make informed decisions.

The level of strategic integration requires payment options aligned with technology changes taking place in architectures and applications, operational business processes and customer service capabilities. And it requires merchants to rethink operational practices and technology beyond creating one-off capabilities.

Optimize to Capitalize

The rapid growth of new payment alternatives versus adoption is challenging merchants in the prioritization of initiatives. Customers are interested in and aware of alternative payment options, but merchants aren’t optimized to capitalize on them. To do that, merchants must move from reactionary to strategic approach to balance internal and external forces to deliver the desired consumer engagement and capture revenue.

Operational Impacts

New payment alternatives require careful incorporation to address the customer interaction and service needs along with internal operational processes for customer service, fulfillment, accounting and auditing.

The scope of operational concerns includes:

- Customer service process and procedure learning

- Timely, accurate and clear invoice/billing information

- Integration with fulfillment systems and processes

- Fraud and loss prevention awareness

- Sales audit and accounting procedures

- Integration with promotional capabilities

- Chargeback and dispute resolution

Technology Impacts

Engaging customer experiences are enabled by technology that provides accurate information readily presented when needed in an easily consumable manner. Merchants need to begin adopting technology solutions that allow for the exchange of data between systems through a service layer.

Payment systems will need the ability to exchange information with customer, order, billing and fulfillment systems, providing data when needed to best inform the consumer and transparently communicate commerce transactions.

Technology must also address the encryption or tokenization of data to reduce the risk of payment information persistence beyond the transaction.

Systems must be able to continuously monitor, predict and prevent fraudulent transactions through effective analytics.

Security, Risk and Compliance Impacts

Payment systems require a risk management process that identifies, measures, monitors and limits the risks aligned with compliance requirements and standards.

Payment Card Industry Express (PCE) compliance and card data security

- Card data processing flows and storage

- PCI scope

- Encryption and tokenization

- Accessibility and governance


- Settlement risk as it relates to completion of the transaction

- Cyber risk regarding electronic transactions

- Prevention of financial crimes and fraud

- System integrity, risk triggers and controls based on organizationally defined tolerance levels

- Ability to produce performance and efficiency in technology systems (IT)


- Use of chip-and-signature versus chip-and-pin

- Changes to fraud methods challenging controls for investigating and resolving disputes and chargebacks

- New fraud behavior of organized theft targeting non-compliant merchants

- Shifting commerce fraud to other channels

- Inability to trace, quantify and predict fraud

The next event is scheduled for March 18 at 9:00 AM in the form of a discussion led by a member of the Federal Reserve concerning faster payment initiatives. Delays in payment processing through the Automated Clearing House has long been a pain point for customers and merchants as they strive to live in a world of instant payments.