Has mobile payment hit its tipping point?

Image via Apple

In June 2013 mobile surpassed desktop and laptop usage for minutes on e-commerce sites for the first time, at 55 percent mobile versus 45 percent desktop. Mobile’s importance in retail has often been spoken about. For brands and retailers who haven’t mastered their strategy, now is the time.

The release of the new iPhone 6 is likely to represent a tipping point in mobile payments, bringing it quickly into the mainstream. Several device manufacturers, retailers and credit card issuers have already adopted the NFC technology. Ensuring its quick adoption: roughly 45 percent of consumers replace their smartphones every year, according to Roger Entner of Recon Analytics.

Apple Pay is a system with the consumer firmly top-of-mind. A transaction-specific security code is used to process the payment, without exposing the customer’s name, bank, or credit card information to the merchant. Apple doesn’t store the transaction information either.

The boon for retailers here is in security. If they are not storing customer information, their attractiveness to hackers is minimized. But what is gained in trust is lost in insight. Some current practices around loyalty and service will need to adjust. 

BIG DATA AND CUSTOMER LOYALTY

Because customer data is not transmitted to the merchant, retailers will be blind to who is purchasing. The in-store data may look like many random transactions instead of customer-level behavior. Retailers and brands without a strong loyalty program, credit and debit card information easily identifies customers. 

Determining who is buying what is about to get more difficult, and this puts customer relationships and loyalty at center stage. Retailers like Starbucks, Sephora, Target, MLB.com and OpenTable are still solidly positioned with highly adopted apps and Passbook-enabled loyalty cards. Another reason to ensure your app is well used: 46 percent of US shoppers claim to be less likely to shop the competition when inside a company’s mobile app.

RETURN POLICY

Many retailers also rely on stored customer purchase information when processing returns. As this information is no longer kept, return policies and procedures will need to be adjusted at store-level to ensure ease of returns is maintained.

Apple Pay is an opportunity for mobile engagement with a larger slice of customers. Brands and retailers need to invest the time to determine how they will capitalize on this opportunity: driving customer loyalty while enabling instant payments.