How Mobile Payments Will Take Over All Payments
Mobile payments are bound to become the next big thing. They’ll not only become the prefered way to shop, mobile payments will also impact everyone from merchants, financial institutions, and fintech startups as they prepare for the mobile payment takeover.
In fact, we’re already expecting to see mobile payments triple in the U.S. within the next year as approximately 37.5 million people will make use of the technology.
How will mobile payments eventually take over all other forms of payments? Here are the four main reasons.
Mobile Payments Are More Secure
If there is one obstacle holding mobile payments back it’s security. In fact, according to a global study conducted by ISACA, only 23% of respondents believe that mobile payments are secure in keeping their personal information safe, with another 87% expecting to see a rise in mobile payment data breaches over the next year.
Security is such a concern that we are in the U.S. have just recently began to use chip technology instead of swiping our credit cards. The thing is, EMV isn’t all that secure and mobile payments are working on providing air tight security for customers.
For starters, new payment terminals will not only accept EMV chips, they’ll also be equipped to handle near-field communications (NFC). With NFC-enabled terminals contactless payments will be more secure since card information is encrypted on the mobile device and is “tokenized.”
Another level of security currently offered by Apple Pay and Samsung Pay is using your fingerprint to authorize payments. And, if these devices are lost or stolen, you can remotely change your password or shut-them down.
Besides encryption and fingerprint ID, companies are improving mobile payment security through two-step authentication, password generators within mobile apps, and unique barcodes that temporary.
Fast, Secure, and Easy-to-Use Alternatives to Traditional Payment Methods
Tech juggernauts Apple, Google, and Samsung have all unveiled their versions of mobile payment applications over the last two years as alternatives to cash, ecash, checks, and plastic. Since essentially everyone in the world uses a mobile device that runs on either Android or iOS, the integration of a built-in mobile payment system will be too tempting not to use.
More importantly, as already mentioned, these type of mobile payments are more secure than traditional payment methods and EMV. They’re also faster when checking out. The Smart Card Alliance says that “Chase has reported that customer time at the POS is reduced 30-40%, and American Express has reported that contactless transactions are 63% faster than cash and 53% faster than using a traditional credit card.” MasterCard found that “12-18 seconds were shaved off the purchase time as compared to cash” in drive-throughs.
Finally, they’re easy-to-use. Customers simply open the payment application or the checkout process automatically begins when in proximity to a NFC-terminal, select their prefered card, and tap your screen or the reader.
But, it’s just not completing purchases at a store that have become easier. You can now lend your friends or family money (peer-to-peer payments) by using an app that transfers funds from your bank or credit to their account by just tapping your smartphone.
With that kind of speed and convenience, expect more customers to start embracing mobile payments.
Merchants Can Create an Unforgettable Customer Experience
With mobile payments merchants can provide their customers an unforgettable experience. For example, you can track the shopping trends of customers and analyze their behavior. With this data, you’ll be able to target the right customers at the right time with the products that they’re currently interested in.
Retailers can also target their customers whenever they’re in proximity to your business. If you have a restaurant, you could send customers a coupon as they approach the restaurant. Eventually, customers could also be able to place an order and pick-up their purchase in one swift motion. Let’s say that you place an order for a pizza and pay for it when you leave the office. The pizza will be there waiting for you to just pick-up and go.
Reward Loyal Customers
Accenture found that “Seventy-nine percent of users would make more mobile payments with discount pricing and/or coupons based on past purchasing behaviors. Seventy-eight percent would increase usage if they received rewards points.” This also appealed to half of nonusers who reported that they “would make mobile payments if offered discount pricing, coupons or rewards points.”
If you want to see this in action, take a look at the “My Starbucks Rewards” loyalty program. It has more than 10 million members and grew 28% from 2014 to 2015. Starbucks reports that these “shoppers now account for about 30% of business in North America.” Not only do lines move more quickly, the reward program gives customers the chance to earn free drinks and an opportunity to try new products in advance.