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Retailer commitment key for mobile payments

July 26, 2012

Jason D. Oxman is CEO of the Electronic Transactions Association

Jason D. Oxman is CEO of the Electronic Transactions Association

By Jason D. Oxman

Technology enthusiasts and purveyors of mobile commerce capabilities are widely touting the potential of smartphone-based payments.

Although we are in the early stages of consumer adoption of mobile payments – Gartner predicts $172 billion in transactions this year – some have postulated that mobile will mean the demise of plastic payment cards and the crushing, final blow to cash. Are they right?

The truth is that many consumers consider paying with a smartphone not much more convenient than paying with a card. Similarly, some retailers do not yet see an advantage to their bottom line when customers choose to pay with a phone versus a card.

So how can retailers recoup an investment in mobile payments technology?

Food for thought
We certainly believe that mobile commerce will play a huge role in the future of electronic payments, but not because consumers can replace plastic cards with smartphones.

Instead, mobile payments and the ability to accept them will play a critical supporting role – one that makes it possible for merchants to create a compelling new customer experience that increases sales, builds loyalty and allows retailers to compete on more than just price.

For example, imagine that you are meeting some friends for lunch. As you walk into the restaurant, you open an application on your phone, log in, find the restaurant in a list and tap to open a tab linked to a credit card in your mobile wallet.

The app notifies the restaurant’s point-of-sale system that this is your 10th visit, so you have qualified for a discount today as a reward for your patronage.

Your friends arrive and, using the same app on their phones, connect with the restaurant and you.

The app shows you the specials for the day and suggests an appropriate wine to accompany your meal.

As dessert arrives, you use the app to divide the check, each of you pays using the card associated with your app and phone, and you are out the door.

Your receipt arrives by email a few seconds later. It is easy, convenient, and since your credit card has not left your possession, it is also secure.

The restaurant owner —a merchant that invested in mobile payments technology—is also pleased with this transaction. She has turned that table over about 15 percent faster than she once did. Her staff spent less time at your table and thus can handle more tables.

And she knows that your loyalty discount, or perhaps the coupon she will send to your phone after your visit, will bring you back again soon.

This kind of app is available today and realizes the promise of mobile payments to attract, engage and retain customers.

New apps tailored to specific retail businesses, are being developed every day. They take advantage of the full range of smartphone capability, from GPS to Wi-Fi, Bluetooth and near field communication (NFC) along with the ability to collect, store and disgorge valuable customer information.

Retailers that are successful in adopting mobile commerce will be those that think first about how mobile can improve their customers’ experience, build loyalty, or find and reach out to potential new customers.

Each retail merchant will find a unique solution to that challenge. Payments will almost certainly be part of those solutions, because as anyone who has ever left a store without buying because of a long checkout line knows, the checkout process is often one of the choke points that limits a retailer’s efficiency and costs the retailer sales.

Merchant services providers, like retail merchants, are exploring all the opportunities presented by this mobile commerce wave.

The best of them are today working with equipment manufacturers, technology companies and software developers to seamlessly integrate payments into the next generation of mobile apps, point-of-sale equipment, CRM software and retail management applications.

The mobile commerce evangelists may be right about the potential for this brave new world, but it will be the retail sector’s commitment to improving their connection to their customers that makes it happen

Jason D. Oxman is CEO of the Electronic Transactions Association, Washington. Reach him at

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