Everything is going mobile. It seems like smartphones are taking over our lives and now they are replacing our wallets as well. Based on a recent survey by Compete, more than 40% of mobile shoppers have made a purchase on their mobile devices in the past three months. Furthermore, according to an eMarketer report, mobile payments are predicted to reach $1 billion in the United States. This number is expected to grow exponentially to $58 billion by the year of 2017.
While there are positive trends in the data, the market is far from mature – especially in regard to in-store mobile payments. According to Berg Insight, although in-store mobile payments reached $0.5 billion last year, the majority transaction was made through Starbucks’ smartphone app. Other popular mobile payment platforms like Google Wallet have yet to see any significant growth. While many large brands could benefit from a mobile payment app, there are still many different pursuable options and waiting to see how the market pans out seems to be the popular decision.
So, should brands follow the trend and begin adoption of a mobile payment system?
Though it is hard for me to have a definitive answer, I do believe that with the projected growth of the mobile payments market, all brands would eventually need a mobile payment system. Here are a few of my insights:
Remember, success is not easy (or cheap)
As the pioneer of a successful mobile payment system, Starbucks has most likely motivated many retailers to speed up their plan. Within two months of launching the app, over three million transactions occurred using it. However, success is not cheap. Instead of using a third-party platform, Starbucks created their own closed loop mobile payments system. In addition, the company recently announced a partnership and investment of $25 million in Square, a rising payment platform. This success won’t be easily replicated. As a internationally renowned brand, Starbucks has a very large group of loyal customers – something that can’t be said for many other companies.
Choose the right model for your business
While most companies are not Starbucks, there are many other options in the market. One of the most common types of mobile payments is “mobile at the point of sale” by using technologies such as “tap and go” or NFC (Near Field Communication). This type of mobile payment has been widely used, picking up adoption from international brands such as McDonalds and local restaurant chains like Sweetgreen. No matter which one you choose, always be sure it makes sense for your business and it aligns with your overall objectives.
Small business owners have a lot to gain with mobile payments
Small Business owners might benefit the most from this new technology. According to a report by RSR, 20% of businesses earning less than $250 million expect mobile to be their primary form of payment in three years. Different from “mobile at the point of sale,” their best choice would be another model called “mobile as the point of sale”, which transform uses tablets or phones as the cash register. Aforementioned company Square is the market leader in this model, offering businesses a free card reader and analytical apps – all at the low cost of 2.75% per payment or $275 per month.
Lastly, don’t think that in-store mobile payments will become a replacement for the traditional register. By adding mobile payments to your regular check out system, you can attract new customers while keeping the old ones. An additional benefit of adopting a mobile payment platform is the consumer data that businesses can collect. According to the Business Insider, the transaction value of mobile payments will rise to $244 billion in 2017. I am sure every brand will regret not jumping at the opportunity to get a piece of that pie.