Retailers need to be able to read their customers in order to stay ahead of the latest trends. Whether it’s merchandise, services or new ways to pay for them — like mobile payments — merchants and their merchant services providers must work together and plan ahead to maintain a competitive edge.
Consumers may be accustomed to carrying cash and credit cards, but they’re also increasingly carrying smartphones, too, making them potential users of new mobile payment technology. Mobile payment (or m-payment) is defined as paying for a product or service over a wireless network. It relies on NFC (Near Field Communication) technology, a wireless connectivity standard for data transfer over mobile phones.
It works like this: A customer with an NFC-equipped smartphone enters your store, makes their selections and steps up to the checkout. To pay, they simply wave or tap their phone in front of your NFC-enabled terminal and the purchase amount is deducted from the account stored on their phone. You wrap up the transaction by emailing the receipt to them.
According to a new report from KPMG, mobile payments worldwide are forecasted to account for more than $900 billion in transactions by 2015. To hit that mark, they will need to nearly double every year for the next three years.
“Growth in the m-payments marketplace will be driven by customers’ increasing need for convenience and the development of a raft of new applications enabling commerce in the palm of our hands,” said David Hodgkinson, senior manager in KPMG’s customer and channel consulting team, in a prepared statement. He added that contactless mobile payments are expected to account for 37 percent of the market by 2015.
The report noted that the move towards mobile payments as a viable option can be attributed to consumers’ increased use of smartphones. It noted that smartphone shipments globally last year jumped to 30 percent of all mobile phone sales, doubling figures for the previous year.
Additionally, KPMG gave credit to retailers who recognize the growing importance of this new technology to their customers. One in five merchants they surveyed considered mobile payment capabilities to be “important enough to be their main activity or, at least, a key enabler.”
Major retailers, credit card companies, mobile phone manufacturers and telecom companies are all involved in various mobile payment services, including Google Wallet and Isis. Who will emerge as the ultimate winner(s) remains to be seen, KPMG says.
“There is certainly scope for collaboration between smartphone manufacturers, telecom companies and retailers but the big, unanswered question revolves around who the customer will trust with their data and their m-cash,” said Gerry Penfold, a partner within KPMG Risk Consulting. “Battle lines will be drawn around issues such as security, infrastructure and interoperability of devices.”
In the meantime, savvy merchants will continue to follow developments and consult with their merchant services providers so that they’re prepared to deliver all the electronic payment solutions their customers demand.