Summits Yellow

Payment Power

David Murphy

Payments are hot, and mobile payments are red hot. Recent research by IDC Financial Insights predicts that the volume of payments made via mobile devices will cross the $1 trillion mark (£624m) by 2017. And even that is just the tip of the iceberg when considering that the total value for all transactions, including cash, cheques, ACH and cards, is closer to $50 trillion.

So mobile devices could account for even more. But what’s behind this? Predominantly, it’s being driven by smartphone adoption, and consumers paying for shopping via a mobile device - but there is more to it than that.

5 years ago, eCommerce shopping was limited to a few evening hours in front of the family PC. Now with smartphones, tablets and high bandwidth, people have a shop in their pocket 24 hours a day. And consumers use these devices to comparison-shop, check product information, and even checkout, right in the store. Because of this, mobile devices are blurring the traditional lines between commerce channels, and this gives retailers new opportunities to create new business models and customer engagement experiences.

In the 1990s, the holy grail of mCommerce used to be tapping a vending machine with your phone and having a Coke can drop right out. You couldn’t have envisaged back then even some of the simpler devices available to consumers now. Today’s retailers are looking at how they can allow their trusted customers to walk down the aisles, fill their shopping carts, and then simply walk out of the store; not self-checkout, but no-checkout.

Personalised experience
Imagine walking into a high-end retail store, and as you step over the threshold, an iPad-wielding sales assistant greets you: “Hello Mr Jones, welcome back to the store, how was your recent trip to New York?” He tells you that the items you ordered earlier at the store’s online site have been packaged, ready to take away. Oh, and the jacket you wanted, they’ve kept it aside so you can try it on, perhaps accessorise with a tie from their new range. 

He knows your shopping preferences, your budget (as his iPad tracks your recent orders), your spending patterns, even which other stores you’ve shopped in over the past few months. You choose your items, he scans them, and that’s it. “We’ll charge it to your wallet account if that’s good with you, sir”. And all this is made possible through a mobile-enabled e-wallet - the “mWallet”.

An mWallet allows a retailer to extend the customers’ website account onto a mobile phone so that they know who you are, where you live, and how to transact with you wherever you are. The more advanced mWallets even allow consumers to store a balance that can be drawn down against purchases. For example the Starbucks loyalty scheme provides an mWallet (via app download on iPhone or Android devices), onto which a customer can auto-load funds when the balance drops below a pre-set level. When the customer presents the phone at checkout, the cost of the cup of coffee is debited directly from the mWallet.

Starbucks has delighted its customers while reducing the cost of payment, gets the use of all those customer prepaid balances, and knows much more about the habits of its customers – integrating customer loyalty into payment for one’s daily cup of coffee. Every 15 purchases, the customer gets a free drink, with the voucher automatically being dropped onto their app so they can present the online voucher at the store the next time. Sounds like the future – but it’s already here.

Happy customers
In our business, we are working with retailers who want to take it one step further. One North-American fast-food retailer is looking to geo-fence a retail location and allow customers to insert orders directly into the location’s order-system directly from their phones in the drive through queue. This will reduce queue lengths, improve order accuracy and create happy customers.

So what does it take for retailers to deliver an mWallet-based programme? Firstly you need an mWallet platform. The quickest and lowest risk way is to select a white-label e/mWallet provider that already has a successful service in the market and can operate it for you. You may also need to select one that has all the regulatory licenses and global footprint to allow you to expand your programme internationally, without switching suppliers.

You’ll probably want to connect your eCommerce and physical store, inventory and customer management systems, so that you can recognise your customers when they turn up at your store with an mWallet. You may even want to wi-fi-enable and geo-fence your locations. But you can start small by just allowing your own-brand mWallets to be recognised at your physical point of sale.

All sound complicated and expensive? It doesn’t need to be, but in any gold rush there are always going to be a good number of emerging players who are new to the game. So the most important thing is to select a trusted partner with the experience and track record to guide you and help you get there. We see the future of payments – and are already delivering it to our customers.

Joel Leonoff is president & CEO of Optimal Payments, which has been providing payment scheme and eWallet services since 1996, processing over £2bn annually in white-label and own-brand e/mWwallet payments