5 Reasons to Get on Board with Mobile

December 28, 2015         By: Sean Riley

Mobile payments are experiencing a breakout year in terms of consumer awareness.

Collectively, Android Pay, Samsung Pay and Apple Pay are available on tens of millions of phones; ads for the services are seemingly everywhere—online and on national TV, including high-profile events like the Emmy Awards; and incentive programs for using the services abound. All three players, along with the major financial services companies, are working to make mobile payment services the default payment method for consumers.

As part of this, payment networks are enabling mobile commerce transactions by providing access to consumer and point-of-sale devices through innovative digital payment platforms. A recent example came from Discover when it implemented Discover Digital Exchange, a platform that offers both issuers and merchants simple, secure access to mobile payments. The platform is built on flexibility, meaning its partners can customize and choose the services they specifically need to enable or accept mobile transactions, versus buying into a one-size-fits-all program.

“The adoption cycle for mobile commerce is making its transition from early adopters to more widespread use as tech companies build these programs into devices that consumers already use every day, such as we’re seeing with the smartphone,” said Joby Orlowsky, Vice President of Global Business Development at Discover. “As this transition happens, I don’t necessarily believe mobile wallets, as a stand-alone, are the long-term future as an independent item. Instead, it’s in the ability for consumers to pay either seamlessly, or as part of daily life, by whichever device they choose to use. This is why setting up a mobile infrastructure now is critical to the future of businesses, and can be done so easily through Discover Digital Exchange.”

For businesses and issuers considering the integration of mobile into their overall business plan, here’s a look at five benefits of doing so:

  1. Rapid and Seamless Check-out

A smoother, frictionless payment process is one of the most valuable benefits of mobile payments, and this alone could be enough incentive to begin accepting them. Not only can mobile payments vastly improve check-out speeds, but they can also open the door to a wider range of options for check-out.

Some stores have added a mobile point-of-sale (POS) so consumers can check-out anywhere in the store or, in the case of the Apple Store, mobile check-out has essentially replaced the traditional check-out counter. This concept enables more flexibility around where customers can check-out and could drive increased convenience and seamlessness in payments.

  1. Loyalty Programs By integrating a loyalty program directly into the mobile payment solution for customers, merchants could increase customer adoption and retention. Starbucks has led the mobile payments field with that approach. In 2013, up to 90 percent of the $1.6 billion U.S. smartphone purchases going its’ way.1 In July, the coffee giant reported that 20 percent of all in-store transactions were mobile payments.2 With the introduction of “Mobile Order and Pay” nationwide, in which customers will be able to order from their smartphones and skip the line when they arrive, that figure is set to grow.

Not surprisingly, a recent Accenture study found that rewards are a strong motivator for consumers’ purchasing behavior. More than 50 percent indicated they would adopt mobile payments and approximately 80 percent of existing users indicated they would increase usage if offered some kind of discount or reward.3

  1. Enhanced Security

Protection for the consumer is protection for the business. The major mobile payment platforms use tokenization, which replaces traditional credit card data with a “token” that is not directly associated with the consumer or their private information, meaning that even if it’s captured, the information is useless to thieves. And many mobile payment platforms are also reliant on biometric data, making them even more difficult to bypass. Apple Pay, for example, asks for your fingerprint to authenticate a transaction.

Not only do mobile payments help to combat the threat of credit card fraud, but they complement the EMV cards consumers are now carrying. Those cards are more secure than their magnetic stripe predecessors and are likely to breed a higher expectation for security among consumers.

  1. Desirable Customer Base

While mainstream adoption of mobile payments is on the horizon, the consumers using them right now represent a favorable demographic for merchants. According to a recent Accenture report, the consumers most likely to use mobile payments are high-income (38 percent of users; those with a household income of at least $150,000) and Millennials (23 percent of users; between the ages of 18 and 34).3 This is a profitable group to consider that is looking for businesses that are early adopters of mobile payments, just like themselves.

  1. Offering Better Deals to Customers

Mobile payments provide valuable insight into customers’ behavior by creating links between purchases and consumers, driving further data insights down the road to leverage for more targeted, personalized offers. With the right data and analytics, knowledge of a consumers purchase history makes it easier to identify discounts or offers matched to their preferences, which can dramatically increase conversion rates and encourage return customers.

For more information on connecting and enabling mobile commerce solutions, please reach out to ddx@discover.com.

  1. https://www.forbes.com/sites/roberthof/2015/01/22/once-again-starbucks-shows-google-and-apple-how-to-do-mobile-payment/
  2. https://fortune.com/2015/07/24/starbucks-mobile-investments/
  3. https://www.accenture.com/t20151021T165757__w__/us-en/_acnmedia/Accenture/next-gen/na-payment-survey/pdfs/Accenture-Digital-Payments-Survey-North-America-Accenture-Executive-Summary.pdf