February 24, 2017
Mobile payments are taking a meaningful part of the mobile commerce landscape. There’s no question that the use of online payments will continue to rise with increased internet use. Bearing this in mind, we need to ask about our payment behavior. Are we becoming a cashless society?
People in emerging and developing economies are more willing to use technology. Internet and smartphone use are likely to grow in all aspects of our life, also when it comes to shopping and payments.
Cisco Visual Networking Index Global IP Traffic Forecast, 2015–2020 predicts there will be 26.3 billion networked devices by 2020, up from 16.3 billion in 2015. What’s more, according to the latest Visa research, the number of Europeans regularly using mobile devices for payments has tripled since 2015 and is now at 54%. Another report for the US market shows that mobile payments were made by 39% of mobile users in 2015.
In recent years, we saw the rise of mobile payments with a new approach released by the well-known tech brands and FinTech startups. Social media platforms also put effort into changing the way we pay and make purchases online. In a few years, it could be a normal habit to buy items while chatting with friends.
This isn’t going to happen in the distant future; it’s happening today. More and more people use mobile devices to make purchases or, at least, compare product prices or reviews. It’s still evolving, but we are more willing to buy via smart devices today than ever before. The main reason is that it makes our life easier.
A few years ago, people started using mobile devices for social platforms and influencers have been talking about some kind of revolution. In ways, it changed our lives and the way we communicate with friends, family members, and even co-workers. Why not go a step further and make purchases while chatting? It could be simple, convenient, and – what’s highly important for today's society – fast.
All the shifts are driven by changes in technology; it’s getting more secure, faster and cheaper. Now, we offer a variety of mobile solutions so everyone can find something for themselves. FinTech startups provide convenient, one-click mobile payments and express checkout with additional security layers.
Payment providers are ready to offer consumers great mobile solutions, but businesses also have to understand that change is needed. Merchants need to adapt to the new rules and should offer a technology their customers expect.
Customer’s behavior is changing, but they still need time to adapt completely to a mobile payment world. Many of them still stay loyal to traditional payment methods. And it’s not going to change that quickly.
The idea of a cashless society is not that distant as you might think. There are many cashless services people use daily and find useful, such as Uber. You just have to add your card details and then forget about having cash anytime you need a ride.
The greater use of cashless payments is propelled by the need for convenience, but many people feel they have no control over their money with these services (e.g. when the fare is charged automatically). And what if you will be charged for the ride that never happened? We want convenience, but also control over our payments. That’s why services with cash or card payments still do well.
It’s all about choice. For some, carrying physical money is not convenient, but there are also consumers that feel they have more control when paying with cash. The key is to give the consumer payment options he really wants to use, not ones he has to choose.
Mobile payments face some barriers. There are still people that are not familiar with card or electronic payments, finding cash convenient. Many mobile consumers are still frightened about payment security. In fact, it’s one of the most common factors for not using mobile payments.
They’d rather not use new technology to make purchases or even to check their bank account because of the fear that devices can be hacked.
Safely storing credit card numbers and CVVs are things that mobile payment providers need to keep at the top of their minds. Large companies, as well as great thinking startups, take hold of the technology to deliver fraud-proof solutions,e.g. use tokens or fingerprinting to ensure security.
Mobile payment providers need to address all these fears and deliver seamless and secure payments. They also have to focus on anti-fraud technology to mitigate suspect attempts, and ease-of-use to make the payment experience as simple as possible.
Demandware’s Mobile Shopping Focus Report shows that mobile users are more willing to make purchases on mobile devices because of larger screens, but also highlights that mobile checkout still comes with friction.
Payment providers have to keep consumer’s needs and expectations in mind. Despite appearances, it’s one of the biggest challenges, especially because user’s demands are still growing. They should also be aware of the way smart devices evolve. Now we have larger smartphone screens so payment forms should be designed to fit the area and contain the fewest necessary fields to fill in.
It’s all about convenience. Mobile payments should not only be hassle-free but also quick. It’s extremely important for both consumers and online business owners to offer the best solution which can lower the number of abandoned carts.
It’s predicted that mobile payment companies will reach a tipping point in the coming years, but it’s not obvious we’ll become a cashless society. When we have a choice, there will always be a group of consumers that prefer to pay with cash or by card.
Mobile payments have been the subject of hype for many years and now we’re watching the market closely. I think we will observe a positive trend of mobile payment adoption in the coming years.
No one can predict the future of cashless payments, but most can agree that innovation and new technologies developing will affect the payment market. It will also change consumer behavior. Anyway, it may take some time to make a shift.