By Russ Wilson, IBM Director, Mobile Innovation Lab
Mobile payments technology combined with Big Data analytics will completely transform the relationship between buyer and seller.
Mobile-based transactions in the U.S. have quietly gone mainstream, growing 118% per year on average for the last five years. According to Forrester, mobile payments are expected to reach $90 billion by 2017.
Both mobile payments technology and the businesses that use it will push each other to advance the state-of-the-art in security and accessibility in all B2C and B2B business interactions. Mobile POS systems and other cloud applications have paved the way for on-the-go stores such as food trucks and pop-up stores. Mobile payments capabilities combined with Big Data analytics delivering real-time insights, provides targeted, higher value services before and after transactions, driving customer engagement and interactions to new levels.
From pay-at-table to taking payments-on-the-move, Mobile POS terminals will bring innovation in customer service. Retailers no longer lose income from customers discouraged from long lines at the cashiers when they can pay any sales staffer anywhere in the store.
Current mobile wallet options are primarily based on QR codes, tap-to-pay NFC, aided by longer-range wireless communication standards such as Bluetooth Low Energy (LE) and WiFi. Location technologies such as GPS and Apple’s new localized iBeacon technology are combined for in-store notifications and alerts, loyalty programs and location-specific marketing campaigns.
Mobile wallets will be in the spotlight in 2014 as payment networks, merchants, wireless companies and others develop and refine their offerings. Many businesses at every stage of the payment process are implementing new programs, piloting new technologies and collaborating with their ecosystems of partners to evolve and perfect the mobile payment ecosystem.
No More Banker’s Hours
Mobile payments are enabling banks to enhance their relationship with consumers and provide a better user experience. Banks now offer apps that go beyond simply balance checking, credit card payments and remote check deposit. Apps and services now serve a consumer’s mobile schedule, not a bank’s fixed hours.
To stay ahead of their competition, banks are building all-in-one multi-device payments and finance platforms similar to mobile wallets, to cement their relationship with consumers. By increasing access to personalized services and broadening engagement across products, it theoretically becomes less desirable for a consumer to switch between retail bank brands.
For today’s consumer, the adoption of new payments channels is an additive process, and while more is sometimes better, there must be a clear value proposition being delivered. Merchants and banks are challenged to reach and serve consumers consistently through multiple channels, including mobile.
As a result, shoppers have and will continue to gain more control over what they purchase, where they purchase and how to pay for it, leaving retailers and banks the challenge of vying for consumer attention and loyalty.
Survival for many of these organizations will depend on how well they adapt to and deliver on the value propositions made possible by this new mobile payments reality. A reality that is defined by a healthy US economy, creating more collaboration between industries, and engaging with individuals in innovative new ways.