By Michael Gavin
Merchant Warehouse
Mobile technologies are revolutionizing the payments ecosystem. Proliferating options include in-store proximity payments that leverage contactless technologies such as near field communication (NFC) and quick response (QR) or two-dimensional bar codes; mobile peer-to-peer payments; and mobile shopping, which involves buying online via a mobile device such as a smart phone or tablet.
Indeed, Forrester Research predicts that in the next five years, mobile payment activity will move mainstream, reaching some $90 billion by 2017.
The complexity of mobile payments for merchants and industry stakeholders extends far beyond payment technologies like NFC and QR. A plethora of companies - large and small - is working diligently to secure a piece of the mobile pie with branded mobile wallet, loyalty and reward applications.
From innovative startups like Belly Inc., Dwolla Inc., Lemon Inc., and LevelUp to trusted giants such as Google Inc., PayPal Inc., Visa Inc., MasterCard Worldwide and Isis (a joint venture of AT&T, T-Mobile and Verizon), dozens of new technologies, applications and options are flooding the market each month.
Consumer adoption of mobile wallets and loyalty apps is building, but no clear leader has emerged - and it's likely there will not be one. The average consumer in the United States today has 3.2 credit cards, across multiple brands, from the major card companies (Visa, MasterCard, American Express Co. and Discover Financial Services) as well as from major retail brands.
Additionally, customers' expectations in terms of personalized offers and deals are layering additional requirements into payments. According to a 2012 research study from Mercator Advisory Group, 55 percent of consumers have expressed an interest in mobile coupons, but only 10 percent have received one from a merchant.
More likely than not, consumers will adopt a preferred brand; however, they will have more than one mobile payment option on their devices, with payment decisions based on offers, deals or rewards at the time of purchase.
Only one in six POS terminals in the United States are now equipped to accept mobile payments. This complicates the task of planning for technologies and scalability to accommodate new digital wallets and mobile commerce applications that will emerge. And, as consumer adoption and acceptance opportunities grow throughout the United States, a laser focus remains on security, data integrity and Payment Card Industry Data Security Standard compliance.
Merchants, POS developers, agents and resellers continue to struggle with this rapidly evolving marketplace. The challenges range from education on Europay/MasterCard/Visa implementation and the various contactless technologies to understanding digital wallets and mobile commerce offerings, including how each works and what incremental value each delivers to their respective businesses and merchant customers.
For POS developers, payment processing is just one component of a large portfolio of business management solutions including, but not limited to, inventory management, accounting, e-commerce, and customer relationship management.
Most developers integrate with existing processors to deliver a unified POS and payment solution for their resellers and merchant customers. Of course, integrations like this require significant time and resources, so it's critical that the payment processing solution chosen can provide customers with the highest level of security and services.
With an onslaught of new mobile applications and wallets - and no clear leader - selecting a processing solution or platform that offers scalability, flexibility and a single-integration is of critical importance.
As trusted advisers for merchants, agents and value-added resellers also need to seek payment solutions that extend their value proposition with their respective customer bases, offer incremental revenues and are future-proof.
Media attention, analyst predictions and product visions are clouding the marketplace, making it more and more difficult for merchant advisers to assess today's options and select the one(s) that offer maximum opportunity and scalability.
Merchants will need and want to do it all. Regardless of location, size or business type, merchants will require secure payment solutions that meet today's consumer demands, offer new opportunity in the world of mobile payments and drive incremental revenues for their businesses. Today's decisions will have immediate and long-term financial impact on merchants due to hardware exchanges, software updates and potential disruption to business through integrations.
To meet the demands of all existing and potential customers and grow their own businesses, merchants must be equipped to offer multiple payment options involving new technologies that drive, for example, mobile wallets and related gift and loyalty reward programs.
What historically has been a transaction - the ability to accept credit and debit cards - is evolving into an interaction. In today's environment, there is continued pressure to attract new customers and retain existing ones. The traditional business model no longer accomplishes those objectives.
As Merchant Warehouse Senior Vice President, Sales, Michael Gavin is responsible for day-to-day management of the company's direct sales, as well as leadership of all sales activities within the company's agent channel. He has served as a key leader within the organization since joining the company in late 2000. Merchant Warehouse's Genius Customer Engagement Platform is a single, intuitive platform that integrates every transaction technology, loyalty program and more. Contact Michael at mgavin@merchantwarehouse.com. For more information on the company, visit http://merchantwarehouse.com.
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