Mobile isn’t the future of payments. It’s the present.
Payments are happening on more platforms and via more diverse touchpoints than ever. Many consumer journeys have become multi- or omni-channel, starting with research on one device and purchase on another, or in store. It may seem that mobile has, in fact, already arrived – and in many ways it has. But as is so often the case, technology is evolving faster than people’s ability to cognize it.
According to John Gessau, director of merchants payment services at ACI worldwide, and Mercator’s own Ray Pucci, there are still plenty of areas for growth and improvement, both within existing mobile functions, and for the innovation of new ones.
Areas like alt pays and engagement, for example, are still frontiers worth exploring, with a lot of value to divulge. Different countries and regions could also stand to learn from each other, as each one is excelling in a different way and each has something to offer. And finally, new ways of doing things create new vulnerabilities that merchants and processors must consider – but that shouldn’t stop them from taking an innovative risk, because the right tools are already taking shape out in the market.
The younger generation does not see payments as a discrete event, says Gessau. They’re already busy engaging with the world through mobile devices, and payments are a part of that experience. It falls upon merchants to help them move seamlessly into a purchasing event.
To do this, merchants must think of innovative ways to provide extra value and integrate social connection to project their brand into shoppers’ hands on various platforms and touchpoints. Offering a variety of relevant payment methods is important, but it’s only one piece.
As Pucci notes, today’s consumer is a hybrid shopper, navigating between physical, web, and mobile stores. Thus, all commerce is becoming lifestyle commerce, intertwining with social media platforms, mobile order and pay, and other elements of convenience and immediacy for an on-the-go society.
A growing number of consumers want to use Apple Pay, Google Pay, and country-specific alternative payment options. Some alt pays are based on an underlying card, supported by tried-and-true networks that merchants can easily trust; others are unrelated, freestanding, and perhaps a little scary.
More important than which options is the fact that they have a choice. In the consumer’s eyes, the more options they have, the better. This, of course, puts a tremendous burden on the merchant as to which methods they will support. To decide, merchants must consider what other benefits will be delivered to the consumer if a specific payment method is supported.
It has to be about more than just making a payment, Gessau says. Let the shopper collect and use loyalty rewards. Provide targeted marketing offers. Create gamification experiences that are fun for the shopper. Just don’t take it too far: Gessau cautions that when merchants treat mobile apps and engagement as a one-way marketing channel, customers will quickly see through it and move on.
“Nobody likes to be advertised at all day,” he said.
Immediacy and consumer confidence
The pressure on merchants is immense. Consumers expect all use cases to be available and to work frictionlessly. Techs like these are becoming the new norm, and therefore expected by shoppers:
- Personalized checkout and endless aisle drive immediacy in-store.
- Easy returns create consumer confidence, increasing basket size and amount because there is less fear about making a mistake.
- Multi-factor authentication powers self-service capabilities to reduce cashier bottlenecks without increasing fraud risk.
- Compliance with requirements like 3D-Secure 2.0 improve online checkout speed and security.
- Machine learning isn’t just a fancy, trendy new tech – algorithms respond more quickly, and based on more data, to power faster authorization and increased security.
Delivering cutting-edge capabilities across channels drives a strong experience and brand perception. Doing so, however, may require merchants to make other changes, such as reconfiguring stores to accommodate changing tech and avoid gridlock, or training staff adequately to serve customers with new tools.
Merchants must also be aware that new techs and payment methods can create new fraud implications. “Buy online, pick up in store” has attracted fraudsters because it’s a card-not-present environment where they can get away with providing even less information – no shipping address is needed, since they are picking up the goods. That enables them to make off with merchandise quickly, and often then return it for store credit at another location.
That doesn’t mean merchants should shy away from providing the option to buy online and pick up in store, or any other new option. It simply means that they will need the right partners and providers with the right tools and implementation strategies to introduce new tech in the smartest way possible.
Clearly, reaping the full potential of mobile is no easy feat. It’s full of challenges, but also rewards for those who do it right. Mobile ordering, for example, is a whole new sales channel for quick service restaurants (QSRs). Before, customers had to choose: walk into the store, or go through the drive-up window. Now they have a third option. In-store flows and tooling are the hardest to change, but can deliver the greatest ROI of all.
Here are a few other key challenges merchants face, according to Gessau:
- Tech solutions have historically been siloed by channel. Merchants must go the extra mile to find providers who can bridge channels and create an integrated experience.
- Technology evolves constantly, and so does consumer behavior – with different requirements on every device. How can one merchant keep up with it all?
- Having a cool solution that works for you and/or the customer isn’t enough: merchants must play within regulatory, compliance and security requirements and obligations.
In short, merchants want it all: exciting capabilities, built on a foundation of security and reliability. That’s why they gravitate toward providers who offer APIs and SDKs. These technologies promote innovation while still allowing merchants to focus primarily on their core goals.
Usually, says Gessau, it’s a very small factor that ends up driving a significantly different experience and norm in different countries. That one factor can influence consumer expectations and behaviors past the point of no return.
Consider paying at the table in restaurants. US restaurants often let guests check out and leave at their leisure, whereas European diners must wait for the waitperson to bring a mobile POS to the table. Gessau suggests that Europe could learn from the US approach, because the US model avoids the awkward scenario of staff standing over a customer’s shoulder while he decides how much to tip.
The US, conversely, could learn from the Far East when it comes to mobile payments. Users are highly engaged in platforms like Alipay and WeChat Pay, and card schemes are struggling to catch up. Gessau says merchants can learn from the value adds of those platforms and their impact on consumer behavior. Reap the rewards of letting consumers share their experiences with a broad community through reviews and ratings, or leverage cross-selling opportunities using consumer behavior data.
One way that everyone can learn? Pilot programs.
Pilots let merchants try out new experiences within a very limited scope – among friends and family, or just at one store – to gain insight before rolling out on a large scale. This controlled yet real-world environment can help pinpoint what’s working – and what’s not.