4 Rules of Mobile Payments

By Kristen Gramigna 

Forbes magazine recently called the opportunity mobile payment processors face the “$15 trillion gold rush.” But with so much at stake — and so much competition — what do competitors need to do to carve out a spot in consumers’ minds? Here are four ground rules of mobile payments, based on the best practices (and shortfalls) of top mobile payment providers.

1. Reward Customers for Using Mobile Payments

A recent report by Accenture indicates that once customers try a mobile payment app, they are much more likely to convert to regular use — but mobile payment providers must be willing to give them a reason to take that first chance. (In the Accenture study, 60 percent of consumers surveyed that they would be “extremely likely” to use their smartphone for payments if doing so generated instant digital coupons for retailers like Target).

Take the success of Starbucks’ foray into the mobile payments space as an example of how to structure a successful customer rewards program. Though it partners with and invests in a mobile payment processor, Starbucks has its own mobile apps for iPhone and Android, and rewards users with discounts and freebies. In addition, the app improves the customer experience, making for faster transaction processing and reduced wait times in line. At its recent 2014 annual shareholders meeting, Starbucks leadership announced that since introducing its mobile payment features in 2011, 14 percent of its in-store transactions in the U.S. are made by mobile payment, and nearly 10 million customers have downloaded its mobile apps.

2. Piggyback on What Customers Already Understand

By leveraging a relationship with brands that have already won consumer trust, mobile payment apps have a better chance of convincing users to try, and adopt, their service. Though technology certainly plays a role in mobile payment processing, it’s important to note that unlike some of the newer payment technologies, many consumers have a sense of familiarity with leading payment providers, thanks to the relationship they develop with large e-commerce platforms as a form of trusted payment. Local retailers who accept mobile payments should post the company’s logo in store, just as they would for Visa and MasterCard logos.

3. Make the Experience Practical

Though mobile payment technology is innovative, it doesn’t always present a sense of ease or convenience that surpasses swiping a credit or debit card. One of the hurdles for Google Wallet, for example, is that its tap-to-pay feature works only for near field communications (NFC)-enabled devices — and iPhones aren’t. (Fewer than 8 percent of respondents to the Accenture survey said they would use a mobile payment app that required them to switch their current smartphone provider). Likewise, Google Wallet allows for free person-to-person money transfers, both parties must use Google Wallet.

Business Insider predicts that the emergence of Bluetooth low energy (BLE) (currently on more than 200 million iOS devices in conjunction with Apple’s iBeacon platform, and also supported by many Android devices) should help to make mobile payments more practical for consumers, mobile payment providers must make the process seamless to push more consumers into adoption.

4. Address Security Concerns Explicitly

Accenture’s survey data indicates that nearly half of respondents said they do not use mobile payments because of security concerns. To convince customers, mobile payment providers need to educate consumers on what happens if their smartphone is lost or stolen, including how they would handle the resolution of such an event. Acknowledge security values blatantly; provide as much transpareny as possible about security. Mobile payment providers will likely need to make a more concerted effort to proactively make consumers at large aware of these safeguards.

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Kristen Gramigna
Kristen Gramigna is Chief Marketing Officer for BluePay, a credit card processing firm, and also serves on its Board of Directors. She has more than 15 years experience in the bankcard industry in direct sales, sales management and marketing, providing small business owners with helpful advice.

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