I went for a walk last week and wandered into a bookstore, where I stumbled upon two books that I wanted to buy. The problem: I’d left my wallet at home. I asked the cashier whether the store accepted mobile payments. He wasn’t sure, so he had me wave my phone in front of the payment reader. Sure enough, the sale went through.
While mobile payment solutions still aren’t make-or-break for most shoppers, the technology really did save the sale for the merchant in this incident. And, as more consumers begin to think of their mobile devices as mobile wallets, scenarios like these will only become more common.
It makes sense for retailers to adopt mobile payment solutions now for several reasons.
Meet Customer Expectations
While mobile payment is still somewhat of a niche, merchants need only consider businesses that don’t accept credit cards to see what can happen when retailers fail to keep up with payment technology. Business.com reported that 9 percent of people don’t carry cash at all, and 40 percent of those who do typically carry $20 or less. Partially as a result of this, the average store transaction is 120 percent higher when customers pay with credit cards than when they pay with cash.
Most people today carry at least one physical form of payment with them. But merchants should prepare themselves now for the day when many people leave their wallets at home and assume that they’ll be able to buy what they need with their phones.
Take my bookstore example. If the shop hadn’t accepted mobile payments, it’s possible that I might have come back to buy the books later. But, just as likely, I might have ordered them from an online retailer via my phone, cutting the shop out of the transaction entirely.
With recent credit card data breaches at major retailers making headlines, it’s understandable that some merchants and consumers harbor concerns about the security of mobile payments. However, mobile payment providers have ensured that their services are as secure as other forms of payment, if not more so. Rather than using actual credit card data, mobile payment solutions use tokenization to represent card numbers, helping to prevent data from being exposed. Additionally, none of the major mobile payment options work unless a device’s screen-locking capability is enabled and the device is unlocked when the payment occurs, or unless the user’s identity is confirmed through biometric authentication, making it difficult for a thief to pay for purchases with someone else’s phone.
Speed Up Transactions
While they are more secure,chip and PIN (or EMV) credit cards are somewhat slower than magnetic-strip cards. (Most people who have used them probably have had the experience of awkwardly waiting several seconds for their payment to go through.) In an informal test conducted by the New York Times, the speed of mobile payment options was typically at least twice as fast as chip-enabled credit cards.
While each individual transaction saves only a few seconds, that time adds up. In fact, speed may be the most important factor for retailers today. While most shoppers will stick around if a store doesn’t accept mobile payments, they may walk out if they see long lines at the cash registers. Mobile payments can shorten those lines, keep shoppers in the store and save sales.
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