If you’re over the age of 20, you’ve likely used a credit card, counted change and maybe even written a check. But is all that about to change?
Mobile payment hasn’t become the de facto method of financial transactions just yet, but it is projected to overtake those archaic checkbooks and bank notes you’ve been lugging around.
Three types of mobile payments dominate the marketplace today: m-commerce (uses a mobile browser and online wallets), m-payments (uses mobile apps), and m-wallets (replaces your entire wallet). Furthermore, consumers can access several forms of transaction on their mobile devices, including scannable barcodes, mobile coupons and self-checkout.
But are consumers ready to wholeheartedly adopt the latest in mobile payment technology? Adults who are unbanked, for instance, may face a barrier to mobile transactions — there are currently 17 million unbanked adults in the U.S. But many smartphone users welcome the convenience of mobile payments (87% in the UK), while others worry about the privacy factor (79% in Asia). Still, 49% of consumers in the U.S. found shopping on a smartphone awkward.
Then again, many people found paper checks awkward and credit cards confusing the first time around.
Where do you fall in the mobile payment debate? What kinds of transactions do you handle on your smartphone? Let us know your thoughts in the comments below.
The world could be a dramatically different place by 2020. In only eight short years, cash and credit may be gone from our daily experience. In their place? Mobile payment platforms that will simplify and expedite how we pay for goods and services.
“As adoption of advanced mobile devices such as smartphones has exploded in recent years,” a new Pew study reads, “consumers have grown increasingly comfortable using their phones to transfer money, purchase goods, and engage in other types of financial transactions.”
Recent Pew Internet surveys find that one in ten Americans have used their cell phone to make a charitable contribution by text message, that more than one-third of smartphone owners have used their phones to do online banking services like paying bills or checking a balance, and that 46% of apps users have purchased an app using a mobile device.
Incredibly, some sixty-five percent of the technology experts surveyed by Pew believe that mobile wallets will be fully trusted and adopted by consumers to such a degree that they will replace cash and credit by the close of the decade.
“The heart of PayPal is small business,” Peter Karpas, North American VP of customer engagement told Mashable. “The lines between online and offline and mobile are totally blurring for them. This comprehensive revamp of our products allows small businesses to get paid however they do business.”
Labeled Standard, Advanced, and Pro, each tier offers some of the same basic functionality. Payments can be accepted in 25 different currencies from 190 countries, and can be taken from PayPal accounts as well as via credit card or check using PayPal’s new PayPal Here app.
PayPal announced PayPal Here earlier this month. Going up against Square in the mobile payments space, the app offers businesses a card reader so they can accept on-the-spot payments. The app can also accept checks by taking a photo of them, and can be used for invoicing and keeping track of cash payments as well.
Customers who use PayPal can also check in to a business using the traditional PayPal app on their phones, and pay for purchases by simply saying “Put it on PayPal” and having the merchant select his or her name and photo from their own merchant phone or tablet.
The Standard tier of PayPal payments is free for businesses to use. The Advanced tier adds the ability for customers to pay for purchases without leaving your website for $5 per month, and the Pro tier lets you design and host your own checkout pages for full control, as well as accept credit card via phone, fax, and mail.
PayPal checkouts are also optimized now for mobile, so when customers visit a small business’ website to make a purchase, they don’t have to pinch-to-zoom or manipulate the website in order to complete their purchase.
Payments via PayPal were previously called “website payments standard” and “website payments pro,” and as of today PayPal is also dropping the “website” terminology from the name. Comparing it to Apple’s decision to remove “computer” from its named in 2007, Karpas says the company is dropping the website terminology to indicate that the company is moving to accepting payments however you do business.
Let us know what you think about PayPal Payments in the comments.
About 30% of mobile phone users spend an average of about 27 minutes each day text messaging, using the telephone and video chatting, according to retailer CultureLabel.com. The company put together an infographic that highlights the bright outlook for the mobile commerce industry, helped along by the massive growth of smartphone adoption.
As CultureLabel looked to expand its own mobile strategy, the company compiled stats to reinforce the need to grow its m-commerce channel. According to its findings displayed in the online art retailer’s infographic, 5.9 billion out of the 7 billion people (87%) worldwide already have mobile phones. Smartphone sales are up 63.1% from 2010, and a whopping 488.5 million devices were sold in 2011.
Meanwhile, one in seven searches are made with a mobile device. More people are accessing social networking sites this way too. In fact, Facebook mobile users have quadrupled in two years from 50 million in 2009 to 200 million in 2011.
The infographic also points out that mobile commerce is expected to experience significant growth by 2015 from the six previous years — jumping 99-fold from $1 billion in sales in 2009 to more than $100 billion
Do you think mobile commerce will every surpass e-commerce? Do you think these channels will ever surpass in-store shopping sales? Let us know in the comments.
The transition from carrying big, clunky wallets to a payment-enabled mobile device is beginning to revolutionize how consumers shop.
Of course, there is no set standard for mobile payments technology quite yet.
Isis and Google are both working on their versions of the mobile wallet using Near Field Communications (NFC) technology, and PayPal is working on a cloud-based mobile payment initiative. Companies like Square and Intuit also help small businesses process payments via their mobile phones, and there are QR code-based payments in the marketplace, like LevelUp, where individuals are assigned their own unique QR code to pay with. In addition, companies like card.io and Jumio allow consumers to make payments by scanning the credit card with your smartphone’s camera.
With that being said, the future looks bright for companies in the mobile payment industry. Here’s why:
- Mobile payments in 2011 topped $558 million in investment, up from $276 million in 2010, according to research firm Rutberg & Company.
- eMarketer projects that 37.5 million U.S. consumers ages 14 and up will make at least one purchase on their mobile phones in 2012.
- eBay predicts it will do $8 billion in mobile gross merchandise volume and $7 billion in mobile total payment volume in 2012.
- PayPal exceeded expectations for 2011, reaching $4 billion in mobile payment volume, and with more than 17 million customers regularly making a purchase through their mobile phone.
- PayPal is also expanding its new mobile wallet trial services to more than 2,000 Home Depot stores across the U.S., allowing consumers to pay for items at checkout via mobile device or through PayPal and exposing thousands of people to mobile payment technology.
The merge of mobile and money has made huge progress in the past year, which means retailers who embrace it will have a leg up on their competitors.
How will mobile commerce benefit the retailers bottom line?
Mobile payments add value and convenience to the consumer. They will also facilitate the implementation of deals and offers through text messaging or apps, which will ultimately drive customer loyalty.
The problem, however, is that consumers still trust their credit card companies and banks to drive mobile payments.
However, KPMG’s fifth annual Consumers and Convergence survey has found that 23% of US consumers are now “very willing” to use their mobile phones as a wallet, and a study by Javelin Strategy & Research and PaymentOne found that 4 out of 5 consumers would spend more online if offered an easier and more secure way to pay.
Without a doubt, mobile is a very personalized channel that businesses can use to directly interact with their customers, and mobile payments help enhance the in-store experience for consumers.
As consumer attitudes about mobile payments start shifting, we will be seeing more and more people ditching their wallets.
Square, an app that allows businesses to accept credit card payments, has released an update that adds several new features. The app now lets businesses define what makes a regular or loyal customer, and then allows them to add a discount on certain transactions to reward their most loyal customers.
We’ve all got our local haunts. There’s the places we frequent for coffee, the go-to joint for a good haircut, or our favorite dive for a quick beer on the way home from work. Like any good standby, the shop owners know who we are, recognizing us on sight. Perhaps they’ll float the occasional tab, or comp a free drink now and then. It’s the classic way for a small business to grow, getting to know their customer base and cultivating loyalty.
Square knows how this works. Square wants to know you.
Square-adopting merchants can now define their own “regulars” with a new application update announced Tuesday, allowing merchants the ability to recognize their most loyal repeat customers and reward them accordingly.
The update incorporates Square’s most recent refresh of its Card Case app, relying on the new “geofencing” technology included in Apple’s recent iOS 5 release. Once a Card Case-carrying customer enters the shop, the merchant’s Square software recognizes the customer by his or her existing “tab,” a profile created specifically to track that customer’s purchase history at the store. In other words, I walk into the store, my tab pops up on the store’s screen, and the cashier greets me with an enthusiastic “Hi Mike! Welcome back!”
From there, the merchant can see how many times the customer has visited and how much money they’ve spent. The merchant can then use that info to define a “regular.” So if I break the set threshold of visiting a cafe, say, 10 times, a merchant can deem me a regular and start offering me freebies.
Essentially, it’s the antithesis of a Groupon. The daily deals approach pioneered by the Chicago-based Groupon is more like a shotgun, attracting customers with a daily e-mail blast. The participating business then hopes any of those new visitors can be converted into repeat customers. Square’s approach flips the Groupon philosophy on its head; the business targets an existing customer base, those walk-ins who choose to come in without the incentive of a coupon.
“There is no one-size fits all loyalty program,” Quinn said. “Meaningful customer loyalty happens organically.”
Though Groupon may not even be Square’s biggest worry. Google’s Wallet app — despite being far from a complete and finished payment system — incorporates its own type of loyalty program, tailored to automatically apply rewards when a customer spends money at participating businesses. Google also ties in its Groupon Clone — Google Offers — applying any discounts to the purchase with a simple wave of the NFC-enabled device. That said, there aren’t many NFC-enabled devices, and ramping up that ecosystem would require lots of hardware changes anc cooperation from lots of device manufacturers — unlike the approach Square is taking.
And of course, despite any financial scrutiny it faced in the days leading up to its IPO, Groupon is still going strong. As is Groupon’s main competitor, LivingSocial.
Square’s main criticism of its competition, however, involve the level of complication on the infrastructure side. Google Wallet terminal installation is time consuming and potentially pricey, and lacks the human element that Square’s so-called “organic” transactions entail. Daily deals programs are also problematic in that while they may attract initial waves of customers, profiling repeat business isn’t as readily possible — which is where Square’s Card Case “tab” profiles come into play.
“Just as we’ve removed the mechanics of the transaction, we’ve removed all the friction of loyalty programs,” Quinn said.
Groupon and LivingSocial also lack the plan of attack taken by Square and Google: Point-of-sale payments integrated with loyalty-based programs. While daily deals may have the customer base, Square and Google could disrupt in a big way if they can truly scale. Google obviously has the scale advantage here, though Square claims 800,000 customers have used its product in the past year, so it’s well on its way to market penetration.
Further, Square’s update integrates the app into existing brick-and-mortar infrastructure. Merchants can now use the Square Register app in conjunction with their cash register (provided they’re using the properly supported hardware, of course). So now, instead of only providing digital receipts, businesses can also print out physical receipts.
The updated app is freely available for both Android and iOS, and can be found in the Android Market and Apple’s App Store.