It’s no wonder that proximity mobile payments have gained momentum in recent years. Retailers always want to deliver the next, best payment method for consumers – one that simplifies the checkout process and eliminates any hassle associated with shopping. And now, smartphone payments represent a form of technology that will surely transform the in-store shopping experience. Although retailers and consumers have been measured in their adoption to date, proximity mobile payments are starting to grow at an exponential pace and will soon become the mainstream method of payment.
It’s predicted that the ease and convenience of proximity mobile payments will far outpace growth in mobile commerce and mobile peer-to-peer transactions. In 2017, eMarketer projects the average annual spend per proximity mobile payment user will top $1,000 for the first time. They estimate that the value of U.S. proximity mobile payment transactions will total $49.29 billion in 2017, up a staggering 78.1% from last year. By 2021, U.S. consumers will use their mobile phones to pay for $189.97 billion worth of goods and services at a physical point of sale.
It’s not just the mobile revolution spurring this trend. EMV regulations have had a noticeable impact as well. These regulations have required that most retailers invest in new point of sale hardware that allows them to be EMV-compliant. And while retailers’ primary motive with this investment was to become legally compliant, the new hardware also supports other modern features like the ability to finally accept proximity payments.
Yet not everyone has these capabilities today, and proximity payments still represent an overwhelming minority of transactions. As they start to take off, though, it’s important to understand why retailers should adapt to this method of payment and what they need to do to prepare for a future in which proximity payments are mainstream options. In fact, this shift will not just be appreciated, but demanded, by convenience-minded shoppers.
The Advantages of Proximity Mobile Payments for Retailers
Shopping is a powerful and emotional experience. As retailers look to meet consumer expectations and build long-term relationships, it’s important that they eliminate any pain points along the shopping journey. This is especially true when it comes to the payment process because attaining new things breeds positive emotion, but paying for them breeds negative ones. Eliminating the negative parts of the transaction should be every retailer’s goal.
The payment process should therefore be so smooth and frictionless that consumers leave the store with only positive feelings about the brand. Mobile wallets can help achieve this by transforming a slow, manual and prominent process into a streamlined digital one that adds value to consumers and makes purchasing as hassle-free and convenient as possible.
With the mobile payment solution, payment is seen to have more tangible benefits for consumers than traditional forms. Similar to buying and exchanging drink tickets at a festival, customers are more cavalier about their spending when normal transaction processes are removed. Proximity payments help eliminate those negative feelings by adding an element of convenience to the process so that consumers are encouraged to spend more at the store and leave with a better taste in their mouth for the brand, whether that’s a conscious realization or not.
Another advantage of proximity mobile payments is that it creates a new communication channel for brands to engage with consumers. The traditional credit card is a one-way tool, with no method of interaction between the retailer and the consumer. Proximity mobile payments help eliminate this barrier by allowing retailers to send real-time feedback to the consumer, such as gifting loyalty points, sending personalized messages and e-receipts or distributing coupons to their mobile device. Mobile wallets will play an important role in the customer experience by merging both physical and digital channels. By integrating loyalty programs with the POS and offering better rewards than their credit card provider can give, consumers are incentivized to use their mobile devices to shop in-store, increasing purchase and retention rates.
How Retailers Can Prepare for Convenience-Minded Shoppers
Retailers need to prepare for what’s ahead by upgrading their payments systems to mobile capabilities and integrating this tool into their existing systems. They need to move beyond mobile friendly and become “mobile dedicated” in order to take advantage of these new developments. By implementing the right technology and tools, retailers must ensure that they can accept payment from the customer’s device quickly, effortlessly and securely.
In order to prepare, retailers should start at the point of sale. With proximity mobile payments, the platform must be unified and easy-to-use for an uninterrupted experience. With the technology bringing retailers closer to the consumer, they must ensure that the POS is open and able to interact with multiple channels. Only when retailers are confident that the technology is simple and easy-to-use can the system be fully embraced.
Of course, consumers also need to trust that their mobile payment information is secure and reliable. Retailers need to address these concerns by assuring the customer that their data is safe. The good news is that proximity mobile payments’ security concerns for the merchant aren’t different from any other card reader. In reality, proximity payments are more secure than traditional swipe methods and must also operate under the same compliance guidelines as all other cashless payments.
Customers are ready to adapt to proximity mobile payments as long as their shopping journey is enriched and easily accessible. The widespread adoption of this method of payment is approaching, and retailers should be mobile dedicated and prepared to take advantage of this technology to win their customers’ loyalty with a convenient and seamless experience. Now, one question remains – Is your brand ready to take on the future of payments?
As CTO of GK SOFTWARE AG and a Member of the Group Management Board, Michael Jaszczyk manages the development of the Company’s many software solutions. He has extensive experience in software development for the retail sector and as a manager within international IT companies. At GK SOFTWARE AG he initially headed up the Open Scale business in late 2010 before moving into the role of CTO in November 2011. Since 2013, Michael also heads the North American business entity as CEO of GK Software USA.