Overcoming obstacles to mobile payments

For mobile payments to succeed, merchants and payment companies need to think in terms of incentives. That's a key takeaway from a new report by the market research firm Ipsos. Separately, a study prepared by Payments.com and Bank of America Merchant Services points to a notable disconnect between quick service restaurant operators and their customers when it comes to mobile payments.

The digital divide between what customers want and what quick-service restaurant (QSR) managers think they want exists at every stage of the dining experience, according to the Restaurant Readiness Index, which was just published by Payments.com. But it's most apparent in the way each party views mobile payments. While 90.9 percent of QSR customers surveyed reported positive experiences with QSR payment apps, just 62.9 percent of surveyed QSR managers thought the apps were satisfactory. Similar disparities were also identified in perceived satisfaction with third-party apps, like Amazon Pay, Apple Pay, Google Pay and Samsung Pay.

QSR managers a big on debit cards: 92.8 percent view their experiences with debit cards favorably, while just 81.6 percent of QSR customers reported similarly favorable impressions. Credit cards were the one payment type where the two groups' perceptions came closest: 90.5 percent of QSR managers viewed them favorably as did 87.0 percent of customers.

Moving the needle on mobile adoption

Despite expectations triggered by the introduction of nonbank mobile payment apps, mobile payments have been slow to catch on widely. Walmart Pay, arguably one of the most popular applications based on QR-code technology, is used by just 11 percent of Americans, according to Ipsos.

While mobile payments are growing faster than credit card payments, based on Ipsos research, a major drawback is the different needs and objectives of various parties: retailers, banks, card networks, acquirers, nonbank providers and consumers.

A new report from Ipsos – Mobile POS: Moving the Needle in Mobile Payments– identifies four "critical components" for successfully driving consumer adoption of mobile payment apps: habituation, ubiquity, incentives, and retailer support and training.

"[P]eople need to tie mobile wallet use to something habitual," like buying coffee or groceries, Ipsos said. "People need to constantly see mobile wallets in common use since 'seeing is believing." And not just in television commercials. First-hand experience seeing others make quick and easy mobile payments while waiting for coffee or unloading their grocery carts counts for a lot.

Incentives, like rewards points, can drive significant usage. "You must give people the reasons they need to load a mobile payment application and then use it repeatedly in a retail environment," Ipsos wrote.

Retailer support and training may be the biggest challenge, and the one area where ISOs and merchant level salespeople can make a difference. Think in terms of hardware, staff training and signage. "For success, people must not have any reservations about pulling out their phones to pay at the POS," Ipsos advised.

Editorial Note: This is The Green Sheet's final news story of 2018. We wish you all a safe and happy New Year and look forward to resuming our payments industry news coverage on Wed., Jan. 2, 2019.

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