The Retailer’s Role in the Mobile Payment Revolution

by Matt Klassen on September 5, 2012

It wasn’t that long ago when companies questioned the value of having a strong digital presence, with e-commerce volume accounting for a miniscule part of their overall sales. But now that an online presence has become the standard for global business, the same questions are once again being asked about mobile payment technology, given that the anticipated “revolution” has sputtered and stalled in its infancy.

The problem for many retailers is that employing mobile payment infrastructure simply isn’t cost effective, with many reporting that mobile payments account for a paltry 0.1 percent of their overall e-commerce volume. This begs the question, is the mobile payment revolution nothing but hype, a marketing platform rather than an actual sales transaction tool?

Simply put, with retailers waiting to see what form factor the technology market adopts, the technology market waiting to see which of the innumerable payment options consumers will adopt, and consumers frustrated by the lack of mobile payment infrastructure, the mobile payment revolution is cyclically stuck, with each party waiting for one of the others to move first, leaving me to wonder if this standoff could actually kill the mobile payment revolution.

While the idea of purchasing goods and services from brick-and-mortar retail locations with one’s smartphone is attractive to many, the truth is that the mobile payment trend certainly wouldn’t be the first attractive idea to be tossed into the waste bin because the market couldn’t agree on infrastructure, deployment, and adoption strategies.

In regards to infrastructure, I’ve written at length about the veritable cornucopia of options currently available, with every major credit card institution, online payment service, technology company, and now Big Box chain stores already developing their own mobile payment platforms, retailers are left with a glut of options but only enough resources to embrace one.

Its an issue the mobile payment market is keenly aware of, as I reported early last month that a committee has been formed involving the major players in this fledgling market, the sole purpose of which is to develop some sort of unified strategy going forward.

But that said, I do think that eventually mobile payment will get off the ground, meaning that proactive retailers may want to start developing their own deployment strategy, lest they be swept into irrelevance by competitors who were quicker to adopt the fledgling technology. This involves analysing one’s existing mobile infrastructure, perhaps devising ways to simply build off that when mobile payment starts to finally gain traction. To that end, the reality is that once consumers are trained to pay with their mobile device, it won’t be long before they begin to shop with it too, meaning that some sort of unified e-commerce/mobile payment strategy is absolutely necessary.

Beyond that, in order for retailers to assist the adoption of mobile payment it’s necessary to identify the extant factors that contribute to consumer apprehension, most notably security. The proactive retailer should create ironclad security measures (like PayPal’s protection for both buyer and seller), giving consumers the peace of mind they need to spur on mobile payment adoption.

In the end, the mobile payment revolution remains in my mind not a question of ‘if,’ but ‘when,’ the answer to the latter dependant on primarily on infrastructure development. But while the market waits for a form factor to be adopted, savvy retailers should begin thinking of ways of employing mobile payment as part of their overall mobile presence, lest they risk being left in the dust when the revolution really begins.

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Written by: Matt Klassen. Follow by: RSS, Twitter, Facebook, or YouTube.

{ 1 comment… read it below or add one }

Manmohan September 5, 2012 at 8:39 am

Very good article, I work for McGladrey and there’s a Whitepaper on the website about mobile retail and its impact on the retail industry , readers will find it interesting @ ( )

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