How are Mobile Wallets affecting retail?

Published on 25 September 2014 by in Latest News

In our evolving economy, consumers expect to be able to shop anywhere at any time. According to Forrester Research, mobile payments will amount to $90 billion in the coming years. With this said, 2014 was set to be the highly anticipated year, where a number of large retailers would be adopting mobile wallet solutions such as PayPal, Google Wallet and more.

iStock 000030589484 Small 300x199 How are Mobile Wallets affecting retail?The idea is that shoppers can download software to their mobile device that links it to their credit or debit card. They will then be able to use their phone to complete a sales transaction in-store by tapping it against a scanner.

Although the solution is aimed at meeting the demand of consumers, offering a mobile retail experience to enhance customer satisfaction, not everyone is convinced; at least when it comes to privacy concerns.

The biggest risk for retailers when it comes to implementing a mobile payments strategy is that a large number of their customers will be worried about their privacy protection. numero believe there is also the concern of diminished customer contact, risking existing customer relationships.

“Placing a potentially limitless amount of financial information in an, as yet, undisclosed place (whether on the device or in the cloud), acting as a central access point, would appear to be a risky move. Recent security breaches in the financial sector, and even Apple’s own iCloud, have shown the flaws in this approach,” said Markus Milsted, Omlis CEO, a mobile payments solution provider.

Another problem for retailers is that there are dozens of different mobile wallets available and at present no clear market leader. For retailers to successfully adopt mobile payments, they need to invest in supporting multiple wallet platforms, entailing a lot of time and investment installing new sales points and hardware.

iStock 000024865346 Small 300x199 How are Mobile Wallets affecting retail?Apple’s recent announcement that they are releasing Apple Pay in the US was set to be a game changer for the perception of mobile wallets, which up until now consumers and retailers have been sceptical about. However, according to a recent survey of 1,500 smartphone users, conducted by research house Marketing Sciences, just 18 percent of the British public said they would trust a smartphone wallet from Apple; compared with 37 percent for PayPal and 29 percent for Visa.

“Apple will have to convince consumers that its Apple Pay system is reliable, convenient and, most importantly secure,” said Marketing Sciences’ research director Richard Snoxell.

For years, tech companies have promised that in the future consumers will be buying everything via their smart device, but due to the poor adoption of existing solutions such as Google Wallet, Softcard and more, numero believe there needs to be a massive shift before it is accepted as a mainstream secure payment solution. Although, considering Apple’s influence and track record in changing consumer behaviour, Apple Pay could finally be the tipping point. At this stage, with concerns over customer privacy protection and scepticism over its value, numero believe consumers will be carrying their wallets and purses around with them for years to come.

 

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