Do you have any cash in your pocket, purse or wallet? How about a credit card? Or, do you pay for some purchases with your mobile device? As technology links devices, goods and services via the Internet of Things, where do mobile payments fit? How do they change how we interact with the marketplace?
Walker Sands, a marketing and public relations agency that follows these trends in its support for B2B, technology PR and social marketing for its clients, completed its 2014 Future of Retail Study (press release) in late 2013. Directions Magazine interviewed Mike Santoro, president of Walker Sands, about the state of mobile payments.
Directions Magazine(DM): How are mobile payments part of the Internet of Things? What distinguishes them from other Internet of Things (IoT) solutions such as lights and heat turning on in a house as the car gets within five miles?
Mike Santoro (MS): Mobile payments fall under the umbrella of the larger connected world envisioned by the Internet of Things. By fostering connectivity between consumers, their devices and businesses, mobile payment technology is part of an overall future in which our devices anticipate our needs and proactively fulfill them.
The distinction between current mobile payment software and connected home technology lies in the failure to conceptualize mobile payments as more than just another smartphone app. The mobile payments of the not-so-distant future could be embedded anywhere, from our in-home appliances to our wearable devices to our cars. Consumers may be able to restock groceries automatically through their fridge’s Wi-Fi connection, or purchase the dress they’re eyeing through their Google Glass without having to wait in line at a register.
Current consumer applications, such as Uber, which allows you to pay for a cab without your phone ever leaving your pocket, are on the right track to fulfilling this next-level of customer expectations for ease-of-use.
DM: What are the concerns/barriers that are keeping so many from using mobile payments? What solutions might we see in the coming year(s)?
MS: Walker Sands’ 2014 Future of Retail Study found an interesting contrast between the number of consumers who no longer carry cash and the number of consumers currently using mobile payment solutions. The survey of more than 1,000 U.S. consumers revealed that 20 percent don’t carry any cash and 60 percent carry less than $20. Yet, fewer than 10 percent of respondents report using passbook-like apps for payments, and only 5 percent are members of any subscription-based retail service.
Figure 1: Cash held by respondents to Walker Sands survey
It seems both convenience and security play a role in the barriers to mobile payment solutions. Whether they are embedded in an application on a smartphone or are part of a universal card such as Coin, the current mobile payment solutions offered to consumers are neither seamless nor safe enough to justify the shift away from more familiar forms of payment. The next step is technology that can ensure security and effortless integration into the existing e-commerce framework for consumers and retailers alike.
DM: What sorts of changes must brick and mortar banks make to be friendlier to users who want to be part of the IoT?
MS: There’s opportunity for banks, as well as other businesses operating in the customer service industry, to be more connected to their customer base through the Internet of Things and some of this is already starting to pop up. Banks that have begun to move into a more digital space—offering remote check-deposit and engaging, online tracking of saving and spending history—will most likely continue to see success as consumers become more involved in the Internet of Things.
There are a number of startups that are extending the reach of banks by allowing consumers to more easily pay for what they want, how they want. Banks would do well to keep an open mind when it comes to this space by adapting to the consumer’s desire to pay for things in new ways.
The other perspective, however, is that organizations such as banks need to be careful about managing consumer privacy expectations. The amount of data that is currently accessible is staggering, but it will be even more so once connected homes and cars become the norm. Banks will need to be as transparent as possible about who has access to a customer’s financial information, as well as ensure the highest level of information security.
DM: Can you provide an example of a retailer that is doing mobile payments “right”? What exactly distinguishes the solution?
MS: Currently there’s a void. While some retailers are starting to be more noticeably on board with mobile payment solutions, there is a huge opportunity here for retailers who figure it out early.
Right now Starbucks is leading the pack. It’s not just because its application allows you to pay without ever taking out your phone; Starbucks is a staple in its customer’s lives, and it has honed in on a way to deliver that morning coffee more seamlessly and easily for regulars.
Apple has also made leaps in this arena, from mobile check out as a fixture of its stores to rumors of an upcoming patented, secure mobile payment option initiated by a shopper’s smartphone. Paypal is moving into brick-and-mortar too, offering retailers a simple option that allows payments with as little as a phone number and a pin.
However, using a credit card is easy: retailers need to understand that mobile payments are only valuable if the transaction is common enough to warrant downloading an app rather than opting for plastic every time.
DM: Your recap of the study notes: "Despite enormous progress in online retail strategies, 40 percent of consumers still want a more interactive experience.” What sort of interaction? Toward what end - speed? Positive brand response? Pricing?
MS: Retailers have made significant progress in creating interactive experiences for consumers, both in store and online. However, with these improvements come more demands—consumers continue to ask for more, and their rising expectations particularly pertain to online and mobile channels. We’re seeing a desire to continue pushing the e-commerce experience further in all regards.
Figure 2: What respondents to the Walker Sands survey expect from an online shopping experience
Walker Sands data found that consumers required a range of factors in order for a website to be considered “excellent,” including:
- 78 percent – increased security
- 67 percent – great online customer service
- 54 percent – enhanced visual imagery
- 25 percent – informational videos
The study also revealed that coupons and promotions (78 percent), as well as latest products and brand news (65 percent) were two of the highest drivers for interaction on social media.
For the most part, retailers are continuing to raise the bar, but as everyone adopts these technologies that provide a better interactive experience, consumers want more. The most successful retailers are and will continue to be the ones that constantly anticipate consumer expectations and stay ahead of them.