CONNECT: The current state of mobile wallets and mobile ordering

mobilepaymentstoday.com

Robert Taylor, co-founder and chairman of Splick.it, moderated a panel about mobile wallets at the CONNECT Mobile Innovation Summit.

The current state of mobile payments in the U.S. is one that tends to cause a lot of confusion with merchants.

Some retailers are waiting for consumer adoption to increase before adding mobile wallet support at the physical point of sale. Others have embraced mobile payments as a way to increase their bottom line and give consumers another choice in how they pay for goods and services.

And every retailer is trying to figure out how best to reach consumers on their smartphones.

A recent panel at Networld Media Group's CONNECT Mobile Innovation Summit in Chicago attempted to clarify today’s mobile payments market, which is becoming an increasingly difficult task when you consider the options available to merchants.

But one option the restaurant sector is turning to more these days is mobile ordering, which has fast become a redefining feature for some restaurant brands.

Rise of mobile odering

Earlier this year, Domino's CEO Patrick Doyle said 50 percent of its U.S. sales come through digital channels, including smartphones and tablets. The company even has an app for Android Wear and Pebble smartwatches that allows customers to place and track orders.

With Domino's as a model for success in mobile ordering, many restaurant sectors have added the feature to become more competitive and increase revenue.

Kevin Sanders, vice president of brand marketing for Pita Pit, told audience members about the impact mobile ordering has had on its business and how the feature helps consumers interact in a new way with the restaurant. Because Pita Pit lets guests customize their orders in a variety of ways, a mobile order-ahead feature is a timesaver for the chain's busiest locations.

"The ability to condition the consumer to order ahead of time, skip the line and pick up their meal has a huge impact for us," Sanders said. "If you can get people to do that, that's the difference between making or breaking that day potentially because you're only going to be able to move that line so quickly.

"The stores that focus on it and understand it and can promote that to their customer base are really seeing a significant increase [in use and sales] because they make consumers think differently about the way they purchase their meals."

Mobile ordering can be considered one of the few features attracting consumers to try mobile payments because of its intrinsic value, according to some of the panelists.

Beyond payments

Mike Dudas, who co-founded Button and previously worked on the first version of Google Wallet, said merchants need to provide value with the mobile experience that goes beyond payments, given the difficulty that Apple Pay and other major mobile wallets have had connecting with consumers at the point of sale.

"There's literally today, minuscule consumer benefit between tapping a phone and swiping a card, especially since we’ve been trained and educated [to do the latter]," Dudas told attendees. "The promise with mobile wallets has always been combining payments with loyalty and location-based capabilities. Those things will come. It’s going to take longer than most people expect."

The payments industry, however, does expect NFC-based mobile payments to see a boost thanks to the EMV transition now underway in the U.S. Because the new chip-reader terminals have contactless functionality, consumers will have more opportunities to use mobile wallets such as Apple Pay and Android Pay should merchants decide to support them.

Drago Dzerve, director of business development for Verifone, is one of a growing number of industry observers who believes the change to chip card transactions could help increase NFC-based mobile payments.

"If we didn't think something was convenient before, [then] chip cards are really not convenient," he said. "There's going to be a linger time and dwell time staring at a terminal. What’s better than that? Well, I can tap my phone and get an instantaneous message that I paid."

The panel also touched upon a number of topics related to the current mobile wallet market:

• Dudas on Samsung Pay's viability when having to compete with Android Pay on its own devices: "I just see a lot of hurdles. It’s a real uphill battle and the basic justification is if they execute perfectly on this consumer service, then they have a fighting chance. But when has Samsung done that recently?"
• Dzerve on whether the Merchant Customer Exchange will exist in 18 months: "Until Visa says I want to drop interchange rates from 1.65 percent to 1.45 percent or whatever it is, then MCX will still exist. [Wal-Mart] can dump millions of dollars into it and lose money, but it still provides them leverage over Visa."
• Sanders on the demographics of mobile ordering users: "Obviously, the millennials are easier to entice [with mobile ordering] and their default mechanism is that direction, but we're not seeing a big difference in who is leveraging our mobile ordering platform based on demographics. You either find that it's a useful tool, so that it’s convenient for you to order food [or not], and people are seeking out those ways to order and pay."