By Brian Albright Business Solutions magazine.
VARs should be prepared with solid, affordable mobile payment support for their merchant clients.
The advent of mobile payment technology could completely change the customer experience by providing a single tool for customers to manage relationships with multiple merchants and financial institutions, while eliminating reliance on traditional credit cards. The technology also presents new opportunities for target marketing, couponing, and other loyalty-building applications.
Mobile payments are going to be part of commerce moving forward, and POS VARs should be prepared for the technology. Android-based phones running the Google Wallet application that debuted last year were just the start. “As more and more consumers adopt the mobile wallet, and more and more merchants and financial institutions embrace mobile payments, we see a huge opportunity to engage with consumers in new and dynamic ways, which represents increased store traffic, revenue, and customer attrition,” says Chris Cox, vice president of product development at First Data Mobile Solutions.
Mobile payments could conceivably be a game changer in the POS space, but VARs will need to carefully evaluate when and where they add this technology to their existing offerings. "Businesses are constantly searching for ways to reduce costs, increase visibility, and improve revenues," says Greg Hammermaster, president of Sage Payment Solutions. "The actual revenue opportunity varies within given segments; for some, it is very low while, for others, it is showing promise for solid revenues."
VISA has released a set of incentives for merchants to use contactless payment options, which could encourage more adoption. If 75% of a merchant's transactions originate from a contactless terminal, they no longer need to validate their PCI compliance.
"I think these factors create a large opportunity to upgrade existing hardware and software," says Michelle Plomske, senior vice president of products at Mercury Payment Systems. "Mobile payments technology also creates an opportunity for new distribution channels that could significantly change the way merchants purchase technology and the way we need to support the technology."
How To Evaluate Mobile Payment Solutions
VARs need to make sure any mobile payment solution they consider supports contactless payment acceptance, and allows for a variety of mobile commerce solutions from different vendors. They should also evaluate credit card security issues, ease of use, reporting capabilities, overall cost of ownership, and whether the provider also offers other payment services like online shopping carts.
"The consumer presents one of the biggest challenges to mobile payments," Plomske says. "What will compel the consumer to change behavior? Loyalty, coupons, and location-based services will play a big role in incentivizing the consumer to change behavior, but the biggest factor will be ease of use. Today there is one wallet in their pocket, they choose the card, and give it to the cashier. Mobile payment solutions need to be as simple as that."
Extended features like coupons, loyalty programs, digital receipts, and discounting features will be a key differentiator for merchants trying to stay ahead of their competition, and encourage customers to use the technology in their stores. "Give customers what they want," Cox says. "Customers want immediacy, convenience, control, relevance, and security, and they will go where they can get these things. Through mobile and online commerce strategies, merchants are able to give customers what they want, when they want it, and how they want it."
There are companies offering these types of more comprehensive solutions now. A vendor called Boku, which was already partnering with wireless carriers on payment solutions, is setting up new services that allow subscribers to see how much they spend with specific retailers, develop budgets, pay for items, and automatically receive discounts tied to those accounts. Boku is also incorporating MasterCard PayPass contactless stickers for mobile phones into its solution. Another company, Moneto, has released a $30 mobile payment kit for Android phones that includes an NFC-enabled microSD card. Shoppers armed with these systems are going to expect compatible POS solutions to be in place.
Solutions Must Fit Shopping Experience
Mobile payments technology is changing rapidly, with new processing methods and new mobile wallet vendors frequently entering the market. POS solutions will have to accommodate a mix of traditional payment methods, along with near field communication (NFC) technology, PIN-and-chip cards, RFID, and phonebased solutions.
"Software developers need to stay flexible for the next couple of years and understand that there will not be a standard for quite some time," Plomske says. "That said, it is a very exciting time to be testing out new technology, so I encourage developers to participate in pilot programs."
Many of the mobile wallet solutions take the card data out of the POS system or create dynamic card numbers, which reduces PCI compliance scope — good news for merchants and VARs alike. Merchants will want an affordable solution that is also easy to use, and will eventually include advanced functions like location-based marketing and mobile coupons.
"Revisit loyalty and coupon marketing strategies," Cox says. "New couponing technologies such as mobile vouchers and card-linked coupons greatly enhance the value proposition of daily deals and targeted promotions by making them more relevant and streamlining the redemption process." Most importantly, these solutions have to fit into consumers' everyday commerce experience, and work with the existing payments system in a seamless fashion.
"Mobile payments done right will include an endto- end, secure payments environment that offers an easy-to-use application that will work in concert with a full range of other payment solutions, offering consolidated bankcard reporting," Hammermaster says. "These solutions will produce a roadmap for a business, which includes the ability to create offers for the business' customers, while interacting with the business' accounting/business system."