Mobile Payments Could Save Retailers $90 Billion in Swipe Fees
We’ve seen quite a bit about the impact of mobile payments on the regular shopper. The convenience, ease of use, the security and so on all combining to push more shoppers to take advantage of that mobile app. Yet we haven’t seen so much of a case made to merchants, who generally get the “be where your customers are” speech and expect that to work. However, there’s one big new case made for mobile payments at the retailer level, and it’s called “saving on the $90 billion in swipe fees annually.”
That’s right; credit card companies have been making money hand over fist on swipe fees, but the rise of mobile payments may well shake that notion. Several major retailers—Kohl’s, Starbucks and Walmart among them—have already demonstrated how successful a branded wallet program can be, especially when it incorporates a loyalty program into the mix.
It’s not just about cost savings, either, but a great new potential opportunity. When businesses run their own mobile wallets, they can take advantage of the reams of data generated therein as fodder for analytics projects. Analytics are basically just studying big piles of data looking for patterns that become “actionable insights”, or things businesses can do to take advantage of the patterns found.
Even those who use mobile wallets, like Starbucks, haven’t given up completely on credit cards. Starbucks encourages its shoppers to buy gift cards, which only require one swipe fee when the card is purchased. The coffee that card buys, meanwhile, has no swipe card fee.
It’s not surprising that retailers would look for any way available to save money and bolster already-thin margins. Retailers have had to be extra careful about such things, especially in the Amazon era, as they seek to not only compete beyond price, but ensure they can at least stay competitive on price. Cutting the swipe fee out of their budget could be a big help, but it’s a safe bet credit card companies won’t take that loss lying down themselves.
How the credit card companies respond to this move will be noteworthy in and of itself, but for now, it’s gratifying to see retailers exercise some creative spirit once more.