Mobile Payment Systems and Connected Consumers

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Much has been written over the past several years about the new connected consumer. Pressure on retailers may never be greater to deliver on demands to provide better service, more educated sales associates, and merchandise available anytime, anywhere.

The way customers choose to shop is evolving as well. Show-rooming is transitioning to web-rooming, but the one constant that will continue to grow is the use of mobile payment devices to keep the consumer connected wherever they happen to be.

A part of the new retail industry revolution includes how and where people pay for their merchandise. According to EKN Research, seven in 10 Millennials indicated that mobile payment systems were an influencing factor for their in-store purchases.

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Mobile, Mobile Everywhere, but What Does It All Mean?

Mobile payment, mobile commerce, and mobile POS are three commonly used terms today. For the purposes of this article, we will define the various mobile methods based on descriptions provided by MerchantWarehouse.com.

Mobile Payment. In their most simplistic definition, mobile payment is the payment for an item or service from or via a mobile device. While many today associate mobile payment systems primarily with “contactless” payments like near-field communication (NFC) or bar and QR codes, SMS, mobile web payments, and direct mobile billing are also included in its broader definition.

Mobile Payment Acceptance. Unlike the broader term of mobile payment, mobile payment acceptance signifies the ability to accept payments on a mobile device, whether it is a smartphone or tablet. The typical set-up includes a free or low-cost attachment that allows for the swiping of traditional credit and debit cards. The device is connected, through the smartphone or tablet, to a credit- and debit-card processing application.

Mobile Commerce. While some interchange the terms mobile payment and mobile commerce, the latter has its own, distinctive definition. Mobile commerce encompasses mobile payment, but also includes a variety of mobile-based activities including content purchase and delivery, money transfer, auctions, browsing, marketing and advertising, and location based-services.

Mobile POS. Mobile point-of-sale (POS) is predicted to be the future standard, even among tier-one retailers. Many leaders are investing in mobile POS—hand-held checkout devices that serve as a payment extension to the company’s larger POS system. While these new mobile POS devices have some of the same characteristics as mobile payment acceptance devices, they are much more robust in terms of features and reliability. These new devices will include the ability to accept mobile gift, NFC, QR/bar code, and include integrated loyalty and reward.

Tablet POS. In today’s marketplace, more and more point-of-sale developers are focused on iPad and tablet development versus traditional systems. These new platforms afford developers with more options, more capabilities, and a lower-cost alternative while retailers receive parallel benefits in terms of features and functionality, portability, and reduced cost. In fact, tablet-based POS systems open up a new opportunity for smaller retailers that, due to high cost, were not able to leverage POS in the past for their business.

As mobile payments continue to gain favor with consumers, the market is almost guaranteed to get more crowded with service provider options. Associated challenges will also grow for retailers to accommodate the various forms of payments while remaining transparent to the customer experience. There is a real possibility that a consumer might tap their device on a terminal in one store, use a QR code in another, and complete a transaction via a mobile application in another. There will be plenty of room for confusion from both the consumer and front-line employees at retail locations.

In order to remain competitive, retailers will need to find ways to accommodate mobile payments and provide a seamless shopping environment for their customers while accepting a whole host of mobile payments from a variety of devices.

This article was excerpted from “Mobile Payments: The New Retail Revolution.”

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