Guest Post by Nick Nayfack, Director of Payment Solutions, Mercury Payment Systems

Consumers are already using their smartphones when they shop. They just need the incentive to take the next step to making a purchase with their phone. According to Google, some 79 percent of consumers today can be considered “mobile shoppers” because they use their smartphones for browsing for product information, searching for product reviews or looking for offers and promotions. Today’s merchants see their customers browsing their store with smartphones and know that mobile marketing is no longer an option, it’s an imperative.

There is a clear opportunity to target avid smartphone users, as well as provide merchants with the ability to turn their point of sale system into a marketing engine simply by capturing their customers’ phone numbers. By creating a point of sale environment where processing becomes prospecting, mobile and alternative payments become a natural extension of the convenience and value that merchants and consumers are looking for. Not only can consumer use their phones in store to gain product information or exclusive offers, they can skip the checkout line by paying with their phone.  In this environment, mobile payments gain adoption because of the valuable service it provides to both the merchant and the consumer.

What is it that is driving merchants to adopt mobile point of sale systems (POS) – doubling their implementation in the past year – and consumer rapid adoption of smartphones – while mobile payments has yet to experience the same growth curve? The slow speed of adoption can be tied to two gaps in the current payment landscape: convenience and value. Merchants are adopting mobile POS systems because of their affordable pricing, the ease of use, and the ability to tie value-added services like loyalty programs and gift options to their customer’s checkout experience. Consumers are looking for more value for their money and more likely to sign up for opt-in marketing at the cash register or loyalty programs if they feel like they are getting something in return.

Where is the value in Mobile Payments today?

1. Information is Still Key

Consumers are using their phones now mostly to find product information, restaurant reviews, and discount offers.  90 percent of smartphone shoppers use their phone today for “pre-shopping” activities. The most common are price comparisons (53 percent), finding offers and promotions (39 percent), finding locations of other stores (36 percent) and finding hours (35 percent).  In contrast, consumer in-store purchases from a mobile device are still in the minority (~16 percent), but show promise for fast and exponential grow.  As such, if you want consumers to use your mobile payment application, there must be a tight alignment with other frequently used mobile applications (i.e. mobile search.)

2. Remember Your Basics

Key players in the mobile payments space need to make better UX by applying principles learned from the web many years ago: mobile-specific design, clear calls to action and one shopping experience across all platforms.  Beyond the UX, there needs to be clear and repeatable value to the consumer. Special offers or incentives could be paired with your current purchase history to make one-click purchases attractive from mobile devices. From a historical perspective, Amazon introduced this concept several years ago in the e-commerce world with links that provided suggestive purchases based on the buyer’s current purchase (e.g. others that bought this book, also bought the following). While m-commerce has different considerations such as limited time and high distraction of users, there can be some lessons learned from the past.

3. Find Today’s Value

POS developers will succeed today, and in the future by helping merchants to obtain and analyze information about their business and customers. This requires coordinating with an acquirer or processor that has rich historical data to help analyze transaction history, and other data. In this way, merchants can then personalize the consumer experience for new cost benefits or improve operations for cost savings.

Lastly, as mobile evolves, new data points will provide richer context (e.g. location, social context, sku data) and merchants will have even more reference points to deliver a personal consumer experience. In this way, personalization is the key value that is coupled with convenience.

Nick Nayfack is the director of product for Mercury Payment Systems. He is responsible for developing best practices in mobile commerce with industry peers in order to help enable merchants and consumers to navigate technological “ease-of-use.” Nick is also a member of the Electronic Transaction Associations (ETA) Mobile payments committee.