Key Retailer Considerations for Mobile and Digital Wallet Implementation, Strategy

Innovations in mobile and digital wallets over recent years have resulted in a proliferation of wallet models and solutions, all intended to improve customer convenience, leverage data, lessen friction or lower the cost of payments.

The potential for increased growth of digital commerce is evidenced by the number of brick-and-mortar retailers that have introduced mobile experiences. Companies like Domino’s, Dunkin’ Donuts, Sam’s Club and Subway have launched multiple forms of wallet solutions, from “order ahead and pay” options to “scan and go” capabilities, which allow customers to scan products as they shop and pay on the brand's mobile app.

However, for retailers still developing their mobile payments strategy, knowing which solution provider to partner with and how to prioritize mobile features and products to offer the best customer experience can be a challenge.

As consumer expectations for commerce continue to change, retailers need to find new ways to meet their demands. For retailers interested in moving towards a mobile or digital wallet strategy, consider these key factors:

• Consumer Experience and Adoption: Identify the specific problem a mobile payment solution will solve and how the mobile payment solution will support the commerce experience seamlessly.
• Product Features and Road Maps: The mobile payment solution should complement the experience the retailer is trying to create. For example, retailers should consider whether features are available that might attract a targeted customer group, or whether they solve a customer experience issue.
• Data Management: Retailers need understand how much and what kind of data is passed by a mobile or digital payment solution. They also need to manage data security concerns and protect against negative brand exposure or financial loss, including preventing fraudulent provisioning of accounts and protecting sensitive cardholder data.
• Acceptance Terms: Retailers need to review the acceptance terms governing any mobile payment solution they implement. These terms should be reviewed with appropriate professional advisors and may have implications for costs, security, risk, data use and operational matters.
• Financial Considerations (costs and ROI): Retailers may struggle to implement new solutions quickly because of development lead times, technology requirements, and competing IT priorities. Retailers need to evaluate the opportunity to drive incremental sales lift due to digital payment acceptance in the context of potential costs and cost savings.
• Technology: Mobile payment technologies need to integrate with current fraud prevention tools and practices. Fraud prevention for mobile commerce payments provides new data fields and behavioral analytics that can be leveraged to help authenticate customers and avoid decreasing legitimate customer purchases.

When additional hardware or software (or both) are required to support a payment solution, an important consideration is integration into the current point-of-sale platform, tokenization solution, customer database, and debit routing solution.

Multiple technologies are available for in-store mobile payments, each of which raises different hardware, operational and other business considerations.

The proliferation of wallet models and mobile technologies presents both opportunities and challenges for retailers. Careful development of mobile and digital wallet strategies and their integration with retailer infrastructure and desired consumer experience are critical for successful implementations.

Retailers looking for additional insight and details can read the U.S. Payments Forum’s recent whitepaper, “Mobile and Digital Wallets: U.S. Landscape and Strategic Considerations for Merchants and Financial Institutions.”

Randy Vanderhoof  is the director of the U.S. Payments Forum, an independent, cross-industry body focused on supporting EMV and new/emerging payment technology for secure payments in the U.S.