Opportunities on mobile horizon

When merchants ponder their way forward with mobile payments, do they go with a dongle-based solution, a tablet, an upgraded countertop POS or a virtual POS accessed through a PC? The one thing merchants know for sure is that consumers are starting to expect the option of paying for in-store purchases with mobile devices. It is left to merchants and their service providers to figure out the rest.

An August 2013 white paper from POS terminal manufacturer VeriFone Inc. recognizes that merchants need help in understanding the mobile payment options available and, equally so, need guidance when deciding which ones are right for them. In Keeping Pace with Mobile Payment, VeriFone likened the developing mobile payments sphere to the fragmentation of the PC and cell phone markets in the early days, when confusion and skepticism were prevalent. "[B]ut today life without either is unimaginable," the paper stated. "Mobile payment is following a similar path."

NFC and one-rate-fits-all

The mobile payments landscape is indeed fragmented, with no scheme or player dominating the marketplace. VeriFone said larger merchants seem destined to adopt near field communication (NFC) -based mobile contactless payments at the POS as a by-product of the transition from the security-challenged mag stripe card to the more secure Europay/MasterCard/Visa chip card standard.

NFC-enabled POS devices and other mobile applications will help large retailers "expand their reach beyond the countertop and find new ways to enrich the shopping experience," VeriFone said. Smaller, independent merchants have taken a different path, however. They routinely adapt smartphones to accept mobile payments and pay providers a flat fee for processing. But, as VeriFone pointed out, that fee grows less cost effective the more card-based transactions a merchant conducts.

The mobile bonanza awaits

VeriFone said that, despite these trends, many small to midsize merchants are hesitant to proceed for fear of becoming locked-in to solutions that could prove obsolete in the fast evolving ecosystem. VeriFone noted that the "promise of mobile payments and related applications is too great to ignore and those who do so risk losing customer loyalty to more adaptive competitors."

The good news is that once merchants take their first steps into mobile payments, a rich array of value-added services will follow – services such as couponing and loyalty applications that VeriFone is confident will create new opportunities for merchants and consumers alike.

Editor's Note:

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