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It was inevitable that the next big step in mobile payments was going to come from Amazon. Yes, with the announcement that they will be launching a checkout-free store in 2017, the omnichannel customer experience is set to be transformed (admittedly on a small scale, for now).
The technology in the Seattle-based Amazon Go shop will allow customers to choose their products and then leave without the pain of queuing – the bill will be charged back to their Amazon accounts. Innovation indeed, and it will be interesting to see if these stores make it to the UK…
This is an impressive new development in the way technology is changing the way customers pay for their shopping. PayPal was an early innovator to lead the way for consumers and businesses sending and receiving money online.
Since then, tech giants Apple and Android have staked their claim in the payments market with the development of their mobile wallet apps.
Samsung is also keen to break into this area, although the launch of Samsung Pay in the UK has just been pushed back to 2017. Contactless and mobile wallets have made our wallets look sadly archaic. But how are consumers responding, and (beyond Amazon) what is the future for mobile payments in 2017?
What's the future?
Consumers in the UK have been quick to take advantage of the convenience mobile wallets offers. The trend is sweeping across Europe, too. Commerce analyst Juniper Research has estimated that 16 million users will have made contactless payments via their mobiles across Western Europe by the end of 2016. We’re also seeing mobile payments crossing over into foreign exchange with the launch of the Revolut app.
This is set to bring new levels of ease to consumers managing their money when abroad, for example auto top-up from your home country bank account to the app, and the ability to block your account from your phone (handy in a crisis).
This year has seen Apple Pay start to become the norm in retail, with retail giants such as Boots, Argos and Marks & Spencer all making it a payment option for customers. Starbucks Mobile Order and Pay app has also been applauded by the industry, with a panel of experts awarding it third place in our 2016 Digital Innovations Retail Report.
However, although the concept of mobile (or digital) payments is well known, adoption is still relatively low. Why is this? Put simply, the main stumbling block is consumer trust.
With new data hacking scandals hitting the headlines every week, it’s understandable that customers are protective about sharing their personal financial information. Research by Recode found 40% of consumers were reluctant to add their credit/debit card details to their smartphones because of security concerns.
This wariness is understandable, and being addressed by tech companies and researchers across the world. Voice, fingerprint and face recognition are pretty established security measures on mobile. But students at California State University Fullerton are taking this to the next level with biometric research into how vein patterns, retinas and 3D face images can be built into mobile security programmes. Futuristic indeed.
Reassurance to hesitancy
Mobile payment providers are aware of consumers’ hesitancy and are working to provide reassurance. Apple Pay has said privacy and security are at the core of its technology.
When consumers use the app in a store, cashiers will no longer see the customer’s name or card details, helping to reduce the potential for fraud. Likewise, Samsung is alert to the importance of keeping personal and financial information secure. Android Pay uses virtual accounts, which means real credit or debit card numbers aren't sent with any payments.
Contactless is an area consumers have been quick to adopt. The British Banking Association found that the number of payments made in the first half of 2016 outstripped all those made in 2015.
I suspect this growing ease with contactless is because consumers have an existing relationship with their banks, and the actual experience isn’t far removed from the traditional chip and pin method.
For retailers in particular, the next natural step is combining loyalty schemes with mobile wallets. We know from our Unfaithful Consumer research that retailers face a constant challenge of keeping customers loyal.
When they’re in a hurry, the temptation is often to pay up quickly and forget about finding their loyalty card. Online shopping, with all its distractions, can be an equally disconnected experience. For retailers, the opportunity to keep consumers engaged with their brand and products for longer can’t be ignored.
Apple Pay has just taken a step forward in encouraging consumers to engage with loyalty programmes on their mobiles by partnering with gift and prepaid company Blackhawk Network. T
hey have worked together to build tech which allows consumers to store, manage and make payments with gift and loyalty partners, including Amazon.
At the moment this app is tied to Blackhawk’s retail partners and it remains to be seen whether this will go global, but is a clear sign that there is huge potential to integrate payment and loyalty point transactions.
This kind of convenience and ease is exactly what consumers want today. Our research found 55% of UK consumers rate convenience as the most important consideration when it comes to shopping.
In a fast-paced world with endless demands on our time, this lighter, leaner approach to life is something consumers will no doubt embrace if businesses can offer it in the right way
With the potential to offer a more personalised, convenient experience, the mobile wallet could become a powerful new marketing channel. But it’s early days – it remains to be seen how consumers will respond to this technology and how comfortable they are to retire their plastic loyalty cards.
For most businesses, especially retailers, encouraging repeat purchase and loyalty is at the core of their marketing strategies. With the help of today’s technology, a strategy can be put in place to achieve both.
For consumers, too, the shift towards a more streamlined approach which makes their lives quicker, easier and more hassle-free will no doubt be increasingly welcomed.
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