Mobile payments are exploding. With the number of users forecast to grow by 62% to almost a fifth of smartphone users in the US this year, according to eMarketer, the value of proximity mobile transactions is expected to surge to $27bn in 2016.
The boom has been a long time coming. But now vendors are finally overcoming the technology hurdles to in-store deployment.
But the greatest potential of mobile payment will not be in, well, payment. There is little that is transformative about simply replicating a payment card in a smartphone app.
Whilst the bank and tech sectors have focused simply on launching transaction technologies, what retailers and brands are still waiting for is a mobile payment experience that provides solutions that address their concerns.
Marketing is now becoming one of the key outputs of the sale itself
For many, that means marketing and its propensity for ‘spray and pray’. Fortunately, there is enough potential in mobile payment technology to enable consumer outreach that is more powerful than targeted ads through Google and Facebook, for example.
Think for a moment about the kinds of data collected at the moment of transaction. When you checkout using your smartphone, your mobile wallet benefits from intimacy with the vendor; it knows and collects detailed stock keeping unit (SKU) codes of the individual products you buy.
Whilst your bank may only know you spent £13.49 at your favourite cafe today, a retailer-connected payment app knows you bought one Coke, two espressos, one chicken sandwich and a Mars bar.
Payment apps beat ad platforms how?
This doesn’t just beat the banks – it also bests the ad platforms.
This general search intent has no real sight of eventual purchase and is not granular enough to glean product-level insights that could inform really powerful campaign messaging.
That is why marketing, traditionally thought of as the means with which to drive an end goal of product sales, is now becoming one of the key outputs of the sale itself.
The kinds of marketing powered by mobile transactions goes beyond the benefits bestowed by advertising on many counts:
Campaign insight: When you know the specific products consumer’s purchase, you effectively learn their pattern of consumption. This gives a window into the effectiveness of an ad campaign, in whatever medium. Did your ad buy move the needle for product X with consumer Y? If so, respond with additional messaging next up
Loyalty points: Although adoption of in-store mobile payments by consumers has been somewhat lagging, research by Opinion Matters for Kalixa showed consumers would make more payments if offered loyalty features or incentives on top. Integrating loyalty and rewards to a mobile wallet, for example, will drive wallet adoption, thereby producing the two wins of additional sales and new customer data for brands and retailers
Pre-buying products: Incentives come in many forms. Discounts offered for repeat purchases can be put to great effect, whilst beating the queues at high-traffic stores is another way to help consumers. The ability to reserve products in a mobile wallet is, therefore, something we are likely to see much more of
Mobile first interactions: Mobile payment takes the purchasing insights on consumers and through push notifications, in-app messages and emails, turns them into highly effective marketing drivers. It’s why push notifications are the most effective marketing channel on the market currently, and why, according to Urban Airship, targeted push notifications are three times more effective than the non-targeted.
The problem with mobile payments today is that there has been insufficient incentive driving repeat usage.
Using Apple Pay may seem like a novelty the first few times – but there is little benefit over using a contactless card, which is perhaps even more straightforward.
But, when mobile payment is thought of as the glue binding together customer marketing data, a retailer can go from the dark ages of knowing little about customers to making targeted offers based on a detailed and growing consumer profile that is based on actual purchase behaviour, not just vague expressed intent.