Guest Column | November 13, 2012

A VAR's Guide To Deciphering The State Of Mobile Payments

By Henry Helgeson, CEO, Merchant Warehouse

Due to mobile innovation, the discussion around payments has exploded from traditionally an industry conversation to mainstream news. Whether it’s speculation around availability of new payment types like near-field communication (NFC), EMV, and QR codes to conversation about which of the mobile wallet providers, Google, ISIS, Sprint, v.Me, and others, will gain mass consumer adoption, there is no denying that the payments ecosystem is undergoing a major paradigm shift. And, to add even more confusion for VARs and other industry professionals, integrated solutions that offer gift, loyalty, reward, and even advertising, are extending the value proposition far beyond payments.

Gartner predicts that, “Worldwide mobile payment is expected to have 448 million users and $617 billion in transaction value by 2016.” In North America alone, Gartner is predicting mobile payment user growth of 177% from 32.7 million users in 2012 to over 90 million in 2016.*

As a result of the convergence of new payment technologies and additional integrated solutions, there are increased opportunities for POS developers and VARs, but with parallel challenges regarding decisions around the right solutions for their product offerings and their customers.

As developers expand their offerings to incorporate mobile payment and program acceptance, thorough research must be done to ensure that they are investing their time and effort into integrating with a holistic solution that delivers unified security while delivering maximum value to their customer base. Payment integrations often require significant technical resources, so developers must ensure that they have performed their due diligence.

In today’s business environment it’s inefficient and impractical for developers to invest resources in multiple integrations without measurable incremental value for their VARs and, most importantly, their merchants. There are no clear-cut leaders in the ‘race’ of payment types or mobile wallets, leading many developers to wait and see. For those anxious to integrate now and capitalize on early adoption, there is inherent risk to making the wrong decision and investing in a payment solution that is designed for today and not tomorrow. Developers must access easy-to-integrate solutions that are engineered for flexibility and have the specific capability of scaling seamlessly to accept future payment types, mobile wallets, and mobile commerce offerings. Without this flexibility, developers will be left with an antiquated payment acceptance solution or with more work to re-integrate on multiple occasions over time, both leading to additional business disruption and risk of customer retention.

As developers and VARs finalize their respective strategies to capitalize on the paradigm shift in payments, customer expectations continue to expand in terms of payment choice and integrated loyalty, rewards, and personalized offers. Technologies that historically supported the point of sale are now evolving to support a point of service, delivering enhanced business opportunity for merchants to expand their offerings in an effort to attract more new customers and retain existing ones.

Changing customer expectations are also fueling continued evolution in terms of the merchant’s overall value proposition and, more specifically, their ability to deliver choice, value, and personalized offers to their customer base. Combating online retailers and ‘couch commerce’ is a reality for brick and mortar merchants, and leveraging new innovative solutions is critical to their ongoing success.

The future holds great promise for VARs that are able to quickly adapt and create growth opportunities for their customers. The key is identifying the payment partners who share a vision for leveraging mobile to revolutionize the merchant-customer experience. In what is quickly becoming a shared value ecosystem, VARs are in a unique position to build longstanding, mutually beneficial merchant relationships.

*Gartner, Inc., Forecast: Mobile Payment, Worldwide, 2009- 2016, Sandy Shen, May 9, 2012.

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