To compete in today’s mobile market, adopt a strategy that focuses on customer engagement. This is where mobile payment technologies can help.
Blog three of a series.
With millions of apps in the Apple iTunes and Google Play app stores, every day presents new challenges and opportunities for breaking through the clutter to reach customers on their smartphone or tablet.
To compete in today’s mobile market, you must adopt a strategy that focuses on creating and maintaining customer engagement.
This is where mobile payment technologies are becoming an ideal option. Why?
Because giving customers the ability to purchase products and transfer money from their phone – where they spend more of their time – creates stickiness and increases customer loyalty.
There are three types of mobile payment technologies – mobile wallets, mobile commerce, and mobile payments. To users, they might look the same, but the technologies are different and require varying levels of investment. Here are some examples:
- Retailers like Amazon use mobile commerce technology to manage the buying and selling of goods.
- Convenience and pharmacy stores such as CVS use mobile wallet technology to give users access to stored information such as prescription details or loyalty rewards.
- Financial institutions such as Chase let you transfer and collect money using mobile payment features.
For companies that are simply looking to get started, I recommend mobile payments.
Mobile payment readers have been widely deployed at grocery stores and fast food restaurants for several years now, enabling faster, easier purchases at the point-of-sale. Yet mobile payment features can be added to almost any type of mobile app, without a credit card terminal or dongle.
In a previous post, we provided some best practices for identifying whether your mobile app is obsolete or needs improvements. Now, we’ll explore how to build a business case for investing in mobile payments to breathe life back into your app.
7 Reasons to Use Mobile Payments
Mobile payments and in-app purchases are becoming a “must-have” for monetizing your digital strategy and creating loyalty with customers. Consumer brands like Starbucks and Uber have realized this, and their success provides a path forward for the rest of us.
Here are seven reasons why you should add mobile payment features to your app:
Reason 1: It’s the Future
Mobile now represents almost two out of three digital media minutes. Mobile apps usage continues to outpace websites by a 7-to-1 margin in time spent – a ratio that has held constant for the past two years, according to comScore’s 2016 Mobile App Report.
And, since 2015, we have seen year-over-year increases in the adoption of mobile payments, largely driven by big technology companies such as Apple and Google, financial services providers such as Chase Bank and Wells Fargo, retailers such as Walmart, and fintech specialists such as Square and Venmo.
The results have been impressive. According to eMarketer:
- Mobile payments in the USA will more than double in 2017 to $62.49 billion.
- Approximately 25% of adults in the USA used their devices at least monthly to either send or receive money in 2016. That number is predicted to climb by an additional 32% in 2017 and 25% in 2018.
Reason 2: More Sales Opportunities
Do you truly believe that your company has never missed an opportunity to make a sale? Without mobile payment features in your company’s app, you are missing opportunities to make a sale from on-the-go customers who rely on their phones for all their online activities, or lack cash or access to your company’s sales rep.
However, if your company’s app includes mobile payment features, your customers will have the ability to buy from and interact with you at any time and from any location.
This requires educating customers on how to use mobile payment features. As they understand and embrace this flexibility, it will lead to higher frequency and volume of revenue-generating transactions.
Reason 3: Faster Payment Process
In the consumer world, we are using cash, checks and credit cards less frequently to buy things. In the business world, we have grown tired of dealing with paper-based invoices and check payments because this creates cash flow problems, and payments can get “lost in the mail.”
Mobile payments are easier and more secure because the money flow from buyer and seller accounts is much faster and provides an audit trail across the end-to-end payment transaction lifecycle.
Reason 4: Remote Collection of Payments
Mobile payments enable sellers of products and services to collect payment from anywhere in the world. While this concept is normal in our personal lives, it has big implications for workers and business professionals in 2017 and beyond.
In a business context, this means that even if your employees are not at their business location, they can still process payments using your company’s mobile app. That translates to less waiting time for customers to finalize a payment.
Reason 5: Better Security
We are all familiar with the heightened importance of security and data privacy in an increasingly digital world. But when you compare mobile payment technologies with cash, paper checks, and credit cards, some interesting facts emerge:
- Cash is more likely to get lost or stolen
- Fake checks and scams are more likely with paper-based checks
- Plastic credit cards – and their numbers – can easily be stolen using skimmers
Mobile payments rely on technologies such as tokenization, encryption, bio-metrics and 2-factor authentication (2FA) to secure sensitive data. Because of these layers of security, these technologies prevent anyone but the intended user from making payment transactions.
Reason 6: Funds Availability and Transfer
Mobile payments assure all parties in the transaction that the money is immediately available.
Whether you are paying someone else or receiving payment from another party, there isn’t any chance of bounced checks or lack of sufficient funds because it all happens in seconds – the payment initiation, processing, fulfillment, and confirmation of deposit – rather than days or weeks.
This is possible thanks to established, reputable and industry-compliant payment platforms from Bank of America, JP Morgan Chase, Stripe, Braintree and others who specialize in digital, electronic and mobile payment financial services.
Reason 7: Less Complicated and Lower Cost
Perhaps the best part: The upfront investment for mobile payment technologies is minimal when compared to e-commerce platforms and technologies such as Magento or Shopify because much of the payment processing is handled by third-party payment processors such as Square and Vantiv.
Here’s an example:
Apple charges a 30 percent transaction fee for digital goods and subscriptions consumed through iOS apps, such as video game add-ons and content. This fee is waived for physical goods and services.
You’ll also pay a third party payment processor such as Square between 2 and 3 percent per transaction. Finally, you’ll need to pay a developer to add mobile payment features into your app and provide ongoing support.
Compare this with a typical e-commerce platform such as Oracle, Magento or Demandware. While the costs vary, it’s not uncommon to pay hundreds of thousands or millions of dollars for the technology and services. And let’s not forget the organizational change management challenges of moving to an e-commerce business model.
The opportunity to use mobile payments to engage with customers at a lower cost than a traditional e-commerce model is absolutely real.
What’s holding you back from utilizing mobile payments in your organization?
If you’re looking for innovative ways to get started with mobile payments, please check out my next article where we’ll explore some new digital business models for utilizing mobile payments in different industries.
- Bookmark the series to read more in the coming weeks.
- We can help you with mobile app development. Here’s how.
About Jason Miller
Jason leads the Digital consulting practice, one of Centric’s fastest growing service offerings. Jason is passionate about re-imagining the customer experience around digital touch points, accelerating digital transformation and helping clients understand and respond to digital disruption.
Jason has nearly 20 years of experience in business and technology leadership roles in industries including consumer products, healthcare and financial services. Follow Jason on Twitter.