online shopping - Daniel Foster

A Fragmented Holiday Shopping Landscape Ahead for Mobile Payments

November 19, 2018         By: Steven Anderson

Customers like options. We’ve seen businesses frantically struggle to set up omnichannel customer service options so that everyone who wants to talk via web chat or social media can do so.  The Paysafe Group’s Lost in Transaction report, sent our way recently, also fills us in on what kind of a payments landscape merchants will be looking at this holiday season. Spoiler alert: it’s even more fragmented than the omnichannel customer service concept.

Businesses are aware of the problem facing them. The study noted that 64 percent of small and medium-sized businesses (SMBs), which retailers generally are classed as, agree that customers want more “innovative ways to get short-term credit.” They also agree, in 56 percent of cases, that fairly large numbers of customers want to pay with “online cash.”

Issues of geography only compound the problem. For instance, it was revealed that the United States was actually ahead of the game in terms of providing payment methods in digital, in cryptocurrency, and in prepaid cards. No surprise there; gift cards are easily one of the most popular gifts given in the United States. Yet in Germany, they’ve mostly thrown over credit cards—out of the UK, the US, Canada, Austria and Germany, Germany is the country that takes credit cards least—in favor of invoice payments, bank transfers and online cash.

The Germans are also significantly ahead in the use of loyalty cards. They beat Austria—the second closest competitor—by 27 percent to 23 percent. The United States only involves loyalty cards in nine percent of cases, tied for lowest with the UK.

We know that loyalty programs in mobile payments are doing land-office business;  just look at Starbucks. They practically wrote the book on incorporating loyalty benefits into mobile payments, and they’ve had phenomenal success with it. Giving people a little something in exchange for frequent business scarcely goes amiss, and the fact that American retailers are actually near the bottom of this ranking is almost unfathomable.

In the end, we see here how mobile payments is part of a very large ecosystem, and if it’s going to gain any ground, it’s going to have to demonstrate that it’s better than all these other alternatives, so much so that the switch is worthwhile.