The payments and commerce industry has witnessed a paradigm shift due to increased mobility of people with the proliferation of smartphone and tablets. A good portion of mobile device owners regularly use their smartphone for shopping. In 2013, more than 90% of smartphone users’ accessed e-commerce sites through their mobile handsets. That’s compared with the 78% percent of desktop web users that accessed e-commerce sites. And Ecommerce is just $1 Trillion to $1.5 Trillion industry whereas purchases at Physical stores are a 10-15 times bigger industry in size. Now Mobile Technology is enabling powerful solutions to do proximity payments and solving issues in retail transactions.
The use of smartphone and tablet is not just limited to m-commerce. In industries such as household items, apparel, and pet care, more than 70% of smartphone shoppers use their phones in-store to help with shopping. In fact, two-thirds of baby product shoppers compare prices on their phones in-store. Currently consumers have product details, price comparisons and reviews available instantly at their fingertip. Consumers are turning towards retailers who provide an enhanced experience through smartphones vis-à-vis retailers who do not optimize their mobile experience.
Let us take a look at some of the payment segments in which mobile technology has made prominent impact:
With the advent and increase in penetration of smartphones, MPOS has come up as a lucrative alternative to the bulky and expensive conventional POS, for customers and retailers alike. Global mPOS shipments grew by more than 50% in the year 2013 to 8.4 mn units, from 5.5 mn in 2012. The numbers go well with the fact that small and big merchants are alike supporting mPOS for transactions to get themselves free from the hassles of handling the cash, and the smartphone penetration is increasing significantly year after year, even in the developing economies. There are well known big players in this space: Players like Square in US and izettle, Payleven and Sumup have been hailed as being some of the brightest start-ups in the technology space over the last few years. The factors contributing to the growth of adoption of mPOS are easy to see: The cost effectiveness makes it a preferred choice for smaller merchants, while wide availability and ease of usage makes it an instant choice over the cash register or the cigar boxes for the medium and large players too.
Proximity Payments via Mobile Technology:
Short range mobile phone technology is arguably the most dynamic and fast evolving concept in the mobile & payments Industry. Two of the most popular proximity payments standards are NFC and Beacons.
NFC is a set of short-range wireless technologies that allows mobile phones, or other devices, to collect data from another device or NFC tag at close range of 4 cm (1.5 in) or less. Undoubtedly, one of the sectors where it was expected to bring a paradigm shift was contactless payment, since MasterCard and VISA were already members of the NFC Forum founded by Nokia, Sony and Philips in 2004, targeting its use for payment using mobile devices, consumer electronics and PCs.
NFC also emulates a credit card. One can touch his NFC enabled phone to a product and the payment can be made easily. It allows Peer-to-peer communication. Besides, as a reader, if there is an NFC-enabled board, one can take the phone close to the board and upload or download information. Google has continued to push on NFC and rolled out the NFC-based Android Beam in Android 4.0.
Beacon is “Low energy” Bluetooth technology, capable of sending notifications to responding devices in close proximity. It will push data and insights about the products that are near to the user. Thus Beacons, literally are wireless sensors, that are capable of transmitting data to the iPhones using BLE.
Based on Bluetooth technology implies it can enable transactions with longer range. Range of Bluetooth technology is much larger than NFC. Besides, while many of the handsets available in market today don’t support NFC, nearly all of the smartphones are Bluetooth enabled. “Low Energy” implies cost effective. It can run for about two years on a single coin battery.
In the age of context, iBeacon promises to take the concept of proximity payments to unprecedented heights. Like NFC, iBeacons also lets the user pay the bill using iPhone and iPad.
Location, Rewards and Loyalty via Mobile Technology: Location based services have become easy to implement and deliver because of the smartphones. Most of the smartphones are GPS enabled and many developers have come up with LBS based apps that help companies find the exact location of the customers, and based on that, targeted advertising campaigns and offers are provided to the customers. Similarly, rewards and loyalty are offered based on customers purchasing patterns and frequency of visit, which can all be delivered via mobile technology. Coupons, cards and other such print form of reward system do not always work for many merchants. Mobile marketing solutions companies like MoMark allow customers to earn and redeem points with the ease of a single tap on their smartphones.
Security and Authentication via Mobile Technology: Payment security and authentication industry has evolved with the advent of smartphones. Today, there are companies working on mobile authentication with carrier’s network data and other parameters.
One such company is Payfone. The company figured out that the purchases on Ecommerce sites through the mobile browser need to be simplified. Today, it is providing industry leading mobile identity authentication service. The company is backed by major American banks and payments processors such as American Express, Early Warning and Bank of America, BB&T, Capital One, JPMorgan Chase and Wells Fargo and telecom operators such as Verizon Wireless, Rogers Communications, It is headquartered at New York and operates in three business segment namely, Banking, Commerce and Enterprises providing secure mobile authentication products and services. The Payfone Merchant Hub includes over 300,000 merchants which includes world’s leading app stores and content brands.
To sum it up, mobility along with cloud has proven to be the biggest enabler of payments and commerce. This is the beginning of the Omni Channel experience that has been talked about a lot. Mobile has become the preferred way to give customers the best of both worlds – e.g., research products online and interact with knowledgeable employees at the time of pickup. It helps customers start their journey on one channel and complete it on the other thus creating seamless experiences that increase convenience and engagement.