Weekly Wrap Up: The Future of Mobile Payments

A couple of years ago, mobile marketing experts like myself would have told you mobile payments would need 3-5 years to take off.  Fast-forward to the present and so far, we’re right on track.  A recent report from Bain & Co. finds that 50% of consumers surveyed are aware of mobile contactless payments, though only 25% are willing to make use of this functionality.  Only?  Considering that less than 10% had this option at all back in 2012, I’d call that a pretty impressive growth rate.  Another promising report, this one from Juniper, cites host card emulation technology and Apple’s mobile wallet as key drivers of continued growth.

Despite the optimistic numbers however, consumers and merchants alike remain wary of security risks.  From the merchants’ perspective, the recent credit card hacks at retailers like Target is a startling reminder of the vulnerability involved in processing transactions, be it in store or online.  To incorporate m-commerce to the mix then adds an extra layer of complexity.  However, if consumer adoption continues to grow as it has been and more come to expect mobile payments, merchants won’t have much choice but to take the added risk.  For consumer adoption to grow though, their own misgivings will have to be addressed.  Additionally, there will have to be added value in changing the way consumers have historically made purchases.  That doesn’t necessarily mean that brands must start giving away discounts.  Rather, they must leverage mobile payments in conjunction with other features that offer unique advantages to the shopping experience.

Starbucks has done this to date with their loyalty program.  Now, they’ve also announced plans to allow consumers to place an order ahead of arrival via their smartphone.  It’s simple, yet significant advantages such as these that encourage consumers to engage in new ways.

As this opportunity develops then, who stands to benefit the most?  The merchant who benefits from increased loyalty and incremental revenue?  The banks processing the additional transactions?  Or security solutions to protect those transactions?  My bet is on the latter.  More and more data is becoming cloud-based, a concept many consumers don’t yet understand or trust.  Two things are certain though.  For mobile payments to be the hero they’re projected to be 1) consumers must be educated about the risks and steps taken to reduce them and 2) merchants must prove their value.