How Connected Consumer Lifestyles Will Drive Forward Mobile Payments
Merchants are striving to respond to the ever-changing behaviors and expectations of consumers by creating seamless purchasing experiences that engage customers and keep them returning for more. In turn, payment service providers (PSPs) and technology vendors are endeavoring to meet the needs of those merchants by providing appropriate supporting technology and services.
Who is in charge? What drives mobile payments innovation?
Within the world of merchant payments, mobile is dramatically altering the landscape. Recent research from ACI Worldwide and Edgar, Dunn & Company indicates that merchants recognize this shift in the payments outlook, with 48% of those surveyed already using mobile wallets (a number expected to rise to 77% within 12 months) and 59% viewing the use of in-app payments in-store as a major factor that will impact the retail industry.
To provide the best support to merchants, PSPs cannot afford to merely be reactive to the growth and changes in mobile payments, but should try to anticipate changes and develop solution sets accordingly.
The motivation for mobile
The ways that mobile devices are used around the world to shop and to make payments are hugely diverse – just like the people that use them. This can make it difficult for merchants and payment providers to determine which route to take when devising a mobile payments roadmap.
Ultimately, though, consumers care about solving their own real-world problems, and not about the novelty value of mobile solutions. This should be the single most important point of focus for any mobile payments strategy.
At a broad level, convenience, speed and security are vital to consumers who lead busy lives and often want to conduct transactions ‘on the go’. Mobile payments – whether in the form of mobile wallets, mPOS or in-app payments – deliver against these consumer ‘must-haves,’ naturally driving adoption as they gravitate towards the payment methods that fit best with their lifestyles.
In one example, emerging markets are a high growth area for mobile payments. With limited banking and payments infrastructure in many of these markets, mobile offers consumers a much-needed way to transact, and with rapidly increasing smartphone penetration in these markets mobile devices already play an important role in the day-to-day lives of the average consumer.
Another example (from a mature market) is the city of Saarbruecken in Germany. It has seen a 45% increase in revenue generated at parking lots after mobile-apps for parking tickets were introduced alongside traditional coin-based ticket machines. In this case, the mobile payments capability solves the problem of drivers who don’t always carry spare change, and those who might need to extend their parking ticket without the hassle of returning to their car.
These examples illustrate how important it is for merchants and payment providers to think more about pairing mobile payments with lifestyle issues – to solve real pain points for consumers. That calls for more user-led research and development, rather than product-led payment solutions.
Delivering solutions that meet consumer demand
Rather than forging ahead in developing and deploying brand new technology that supports completely new mobile payment methods, it could be more advantageous for payment providers to step back and explore whether certain lifestyle use cases can be matched with the dominant payment method in each sector and geography. This could be the key to unlocking strong mobile payments: focusing more on mobile use cases than on mobile payment schemes. In some cases, traditional payment instruments leveraged by service apps could potentially be more impactful than adding more payment methods.
However, staying ahead of the mobile payments curve will require agility and responsiveness when developing solutions. From a technology standpoint, open payments infrastructure allows merchants to respond to consumer demand fast, deploying new payment tools quickly and without extensive redevelopment costs.
There is certainly going to be a major advantage to first-movers as smartphone adoption continues to increase and mobile payments infrastructure develops, but there is also a need to continue supporting older technologies in parallel, at least for the foreseeable future.
Partnering for success
Since mobile use cases and ‘lifestyle issues’ vary significantly across geographies, it is important to localize mobile payment solutions. This requires consideration of regulations, data protection laws, pricing quirks and consumer preferences in each market. This is not an easy task and it is the reason that even the largest vendors and solution providers are working with partners at a global level to leverage shared market expertise.
Beyond the challenges of regional market nuances, partnerships among payment providers can act as a broader foundation for successful mobile payments growth and innovation; supporting speed to market, simplified relationships and more comprehensive solutions that allow merchants to readily adapt to consumer demand.
For merchants, this means seeking out vendors who have open technology and a well-thought out partner network, which underpins that technology with powerful local insights and market access. For payment providers, this may mean partnering with companies they may have traditionally considered competitors – to better meet the needs of merchants and their customers, and to effectively support the overall growth of mobile payments.
Download the survey report: ‘Payments trends in the European retail sector’, by Edgar, Dunn & Company and ACI Worldwide. For further information on omni-channel payments and customer experience, download ‘The role of payments in the customer experience’, by RetailWeek and ACI Worldwide.
Related Blog Posts
Payments in Gaming: The Female Gamer Powers-Up
The global games market is booming, with revenues set to reach USD $137.9 billion by 2021. But along with the growth, gaming is also transforming and diversifying; in genre, gaming devices, platforms, economics and demographics. Notably, female gamers are ‘powering up’ – representing 40% of paying gamers across all platforms – and there are implications for how gaming companies deliver their products and the role of payments in the overall customer experience.
Mid-Year Payments Reflections… And What 2018 Has Left Up Its Sleeve
It has been a while since I had a chance to my thoughts, nee, reflections. My all-time favorite movie reminds us all that “Life moves pretty fast. If you don't stop and look around once in a while, you could miss it.” And with this advice in mind, I want to share my thoughts on the ‘Big 3’ of 2018 so far… and prep us all on what to look for as the calendar churns through its last six pages.
Could Blockchain and Cryptocurrencies Revolutionize Payments in the Gaming Sector? [Q&A]
ACI recently partnered with Nextpayway, a company offering a specialist payment solution for the gaming industry. The Israeli start-up is implementing ACI’s UP eCommerce Payments solution to deliver next-generation payments and fraud prevention. We spoke with Nextpayway’s CEO Angela Behar just after the GES World Gaming Summit in Barcelona.
Hat in Hand with 17 Heads: Payments Innovation and the Fraud Pitfalls to Avoid
Imagine that you live in a world that is revenue-agnostic, where payments revenue is so far decoupled from the payments channels that they ride on, and that startup culture and venture capital allow for the creation of all sorts of innovations that have some creative monetization that keep the train on the tracks. If you got halfway through that horrific sentence and realized we’ve been there for quite a while already, I’m impressed. It is essentially the cornerstone of banking, in many capacities.
Time is Money: A Millennial View of UK Faster Payments’ 10th Anniversary
As a millennial, I’ve often been the butt of jokes of those a little bit older than I am (whether colleagues or my own family). One of the clichés perpetuated is that we are constantly glued to our smartphones: In a way that’s correct, but misses an important point. As a young millennial professional, the most important thing to me is TIME. And that’s the reason my phone plays a crucial role in my life – much to the annoyance of my girlfriend and family. It means I can do things on the move, which in turn makes my life a whole lot easier.
Pints, Penalties and Payment Fraud: Welcome to the World Cup
You’d think that England already had the World Cup in the bag, based on the nationwide scenes of jubilation after the Three Lions’ penalty-takers had gone against the (painful) grain of football history, and emerged victorious at the end of a scrappy match against Colombia. However, those cries of “It’s Coming Home” from English football fans may just be a little premature, given that there are still three matches to play (and win) before the English can lay claim to being world champions for the first time in half a century.
Success Speaks: Blue Cross Blue Shield of Michigan Talks Meeting Member Demands in Healthcare
When looking for a payments success story in the world of healthcare, you’d be wise to turn your attention to the Great Lakes and the work done by Blue Cross Blue Shield of Michigan (BCBS MI). In a recent webinar with AHIP (America’s Health Insurance Plans) and ACI, Faran Farooqi, Strategic Capability Implementation and Operations for Blue Cross Blue Shield of Michigan, shared his insights into how his organization addressed the challenges of today to deliver a great payments experience for their members.
Innovate and Integrate to Accumulate: Investing in Payments Systems to Drive Growth
Today’s merchants face numerous challenges, which boil down to one central issue: how to succeed in a constantly changing, complex market, while also investing for the future.
Merchants need to deliver on growing expectations around the customer experience in an increasingly competitive environment, while battling growing costs and squeezed margins. This pressure extends through the whole business for every merchant, in every sector, and it’s driving merchants to look into every corner of their operations for ways to cut costs and redirect resources.
Taking Payments and Fintech for Granted? (A Lyrical Edition)
Based on a very quick search of the Googles, there are 128,014 songs that contain the lyrics “take for granted”— from the likes of Mary J. Blige, Social Distortion, Madness and Frank Sinatra as well as countless other great (and not-so-great) crooners. And that would make for a sizable Spotify playlist… and I do love my Spotify playlists (I’ve been on a Wham! kick lately).
Instant + Open Payments = A Winning Combination
I recently joined a panel discussion at EBAday 2018, alongside representatives from across the payments ecosystem, and the clear consensus was that real-time payments will be the new normal. This was evidenced by some of the interactive polls carried out.