Understanding the Mobile Wallet: 3 Things Retailers Must Know
Mobile payments are complex, with disparate technologies and business models targeting various markets depending on how mobile users choose to transact — e.g., SMS payments, mobile wallets or app stores, just to name a few. This is particularly relevant for credit card issuers, device manufacturers, mobile operators, internet giants, retailers and even startups, who rely on their direct relationships with millions of consumers.
The challenge is enabling a broad and diverse set of businesses to embrace the market without unified technologies and processes. As new mobile payment networks emerge this year, here are three key things brands and retailers must understand to be successful:
1. The mobile wallet is closer to reality. Consumers want convenient, secure and frictionless payment methods. With a mobile wallet, they can leave their cash and credit cards at home and make smaller purchases quickly and conveniently. In theory, a mobile wallet acts like an electronic version of a wallet, replacing everything from credit cards and loyalty cards to coupons and cash.
A mobile wallet is relevant for nearly everyone — over 90 percent of U.S. consumers use a mobile device, according to the CTIA Wireless Association. However, there are several hurdles to overcome before mobile wallets become mainstream. These include integration across multiple processors and compatible merchant and customer hardware. But the outlook for brands and retailers is positive.
For retailers, a mobile wallet is a great opportunity to enhance the customer experience and expedite the checkout process. Mobile wallets have the potential to consistently help merchants increase revenue, reduce costs and decrease fraud, which are all key merchant considerations when choosing payment offerings. Brands and retailers getting on board with a cost-effective payment system is critical to its success.
2. Near Field Communications (NFC) are a key piece to solving the mobile wallet puzzle. For mobile wallets to take off, handsets must be equipped with NFC chips that support purchases. NFC enable the transfer of information in a wireless transaction rather than a physical interaction like exchanging cash or swiping a credit card. NFC can speed up the checkout process by allowing consumers to conveniently wave their phones at NFC readers.
