Smartphones provide shoppers with a convenient and secure way to buy in-store, but will they be adopted as a mainstream payment method?
It’s not news that practically everyone is carrying a smartphone or tablet these days for texting, emailing and browsing, among other things. What is surprising is that we haven’t made the logical leap of mass adoption and started using smart devices for payments as well.
These devices would appear to be an ideal payment tool for both customers and retailers, especially because they are so widely used. And yet no one seems in a hurry to adopt them for payments.
When it comes to embracing new payment methods, mindset plays a key role for all the parties involved.
Both the retailer and the customer must be confident that the use of an innovative payment technology is more convenient than older, tested methods, and that it ensures data security.
Payment technologies do not exist in a vacuum. There is a clear reciprocal relationship between the retailer and the customer.
For retailers to support smart device payment technologies, they must first be convinced that customers will favour them and understand the clear value that these new tools bring to their business and to consumers.
So how can the retailer benefit from the use of smart devices for payments?
With customer permissions, merchants can use smartphone data such as shopping history and purchase preferences to profile customers and offer them a personalised shopping experience.
“Retailers and customers must be disabused of the mistaken perception that smart device payments are not secure. In fact, they are actually safer than classic plastic payments”
Furthermore, contactless transactions can be processed more quickly than older methods, ensuring greater customer satisfaction, shorter lines at checkout and, in turn, more shopping.
The use of mobile payments also enables the offering of incentives such as rewards and gift coupons. The overwhelming success of Starbucks’ mobile app proves that this type of appeal is highly effective in creating brand loyalty.
Retailers and customers must be disabused of the mistaken perception that smart device payments are not secure.
In fact, they are actually safer than classic plastic payments. For this type of payment method to become widespread, both merchants and buyers must be educated about the safety of their data.
No technology is perfect, however, and even the tools with the most potential can have negative impacts if used incorrectly.
While the benefits of smart device payment technologies are compelling, there are some possible drawbacks retailers must be aware of.
”Another challenge is that some mobile payment apps are compatible only with a limited number of systems”
First of all, most digital wallet payments are currently supported only by Near Field Communication (NFC) enabled terminals and special scanners, necessitating a significant investment in new hardware, software and technologies at the processing end. Because of retailers’ understandable hesitation to make this investment, customers who want to use mobile wallets often discover that their preferred payment option is not offered, forcing them to resort to “old” payment methods such as credit and debit cards and PayPal.
Another challenge is that some mobile payment apps are compatible only with a limited number of systems; for example, Samsung Pay only works on the Samsung Galaxy S6-series devices and the Galaxy Note 5. This limitation inhibits widespread use.
Still, today’s world is becoming increasingly smart, from smart appliances and smart cars to smart homes and smart cities. A savvy retailer can gain a key competitive edge by outsmarting its competitors with smart payment devices.
- Oren Levy is chief executive of omnichannel payment platform Zooz.