Benefits of Mobile Payments for Retailers
Mobile payments are more than just a roving point-of-sale (POS) system for retailers; they’re a low-cost way to optimize operational efficiency and improve the customer experience in a way that can provide a significant competitive advantage against retailers of all sizes. Here’s a look at just a few important benefits mobile payments offer:
1. The ability to adapt to customer needs in real time. The inherent nature of a traditional POS carries a significant inconvenience for customers and, at times, a disadvantage for retailers. As Richard Lawson, a MIT researcher who studies the psychology of waiting in line explains, every person has their threshold for how long they're willing to wait in line. It’s fluid based on what the wait is for, the context of the line itself and the person’s other demands for time.
A person who runs errands on his lunch break, for example, may be unwilling to wait more than a minute in a line to make a nonurgent purchase. When the line is perceived as too long, the sale is lost. However, that same person may be completely fine to wait in line for 10 minutes to buy that exact item on the weekend. In fact, he may even buy more on impulse as he waits, to the benefit of the retailer.
This fluid and complex reality of the pros and cons of wait times creates a perfect opportunity for retailers to leverage mobile payments based on real-time demand. Since mobile payments require no more than a valid merchant account and a mobile device that most members of the sales team probably already own, they provide a low-cost way to adapt processes based on the customer’s needs at any given time. If the wait during the lunch hour in your store creeps past one minute, for example, you can send your sales staff into the checkout queue to process purchases on their mobile devices. As a result, you eliminate long wait times at the traditional POS and reduce the chances that shoppers will forego the purchase entirely.
2. Improved payment security at a low cost. Financial institutions and retailers have been mandated to update their POS systems to accommodate Europay, MasterCard and Visa (EMV) smart cards (which are enabled with a chip on the front of the card that's said to be more secure than magnetic-strip cards). Despite that missing the recently passed Oct. 1 deadline will mean retailers impacted by a security breach could bear significant financial liability, a study by the National Retail Federation (NRF) revealed that many retailers will miss the imposed EMV transition date. For many, the reason is cost. The NRF estimates that the transition to EMV-enabled POS technology will cost retailers $30 billion collectively.
However, retailers that use mobile payments can avoid this expense altogether. Not only have mobile payment providers also updated their processing technology to accommodate the new “smart cards” (at a fraction of the $1,000 price tag a fixed-EMV POS terminal carries), some offer liability shift protection as soon as the merchant orders a contactless chip card reader.
3. The freedom to lower operating costs. POS systems present unavoidable operating costs for the equipment itself — and for printers, receipt tape and staff who man the checkout line. Mobile payments enable retailers to transform the mobile devices they and their staff likely already own into secure and mobile POS terminals. This flexibility allows for a comprehensive business model that empowers every member of the retail team to generate revenue.
By enabling customers to receive a receipt via text message or email with mobile payments, paper receipts can be eliminated from the transaction, too. With so many mobile payment providers now competing for retailers’ business, there’s also the opportunity to compare processing fees, contractual obligations and policies around the amount of time it takes for cash to electronically transfer into a merchant’s bank account.
Regardless of a retailer’s size, industry or customer base, mobile payments provide a means to build a better business, both in the customer experience and the revenue potential for the company.