Mobile Payments Help Drive Customer Loyalty

incommBy Mike Fletcher, general manager, InComm Digital Solutions.

If the last decade was defined by online commerce, this one will surely be defined by mobile commerce.

Research firm Gartner forecasts that 450 million users will comprise the mobile payments market by 2017—and that it will be worth $721 billion globally.

One of the biggest drivers of mobile growth is the near ubiquity of smart phones, which continue to penetrate the market: last year, over 968 million smartphones were sold worldwide. Mobile devices have also grown more user-friendly for both the consumer and for the app developer, which means that the opportunities for retailers to start taking advantage of mobile payments are enormous.

Few customers shop without their mobile device in hand or within arm’s reach, so there’s a huge opportunity for retailers to offer a more complete and seamless shopping experience by enabling customers to pay with their mobile phones. Additionally, mobile devices have made it possible for retailers to create and leverage loyalty programs like never before—especially with the help of the robust real time data and analytics collection that mobile payments platforms allow.

Some retailers have already started to leverage mobile payments. Take Starbucks: the 11,000-location chain processes 5 million mobile transactions every week through the company’s mobile app. To help your company join the mobile payments movement, here is a detailed look at some of the tools that define successful mobile payments programs.

Store Personal Information to Reduce Friction
At any given time, customers have access to countless mobile payment platforms that make it easy for them to purchase nearly anything their heart desires—but it’s still a tedious process to complete transactions. Customers need to type their personal and financial information over and over again for each transaction, which is hard to do on a tiny mobile device. There is a growing sentiment among consumers that they shouldn’t have to share this information repeatedly. More shoppers expect that if they shop at a store once, the store will remember who they are and how they like to pay. Forcing shoppers to re-enter their information instead of remembering it for them creates friction in the selling process that can cause retailers to lose the sale.

As we look to the future, a solution for this problem is beginning to emerge. Mobile wallets are starting to make it easier for consumers to store personal and financial information to speed through the checkout more seamlessly—and they have the potential to drastically reduce friction during the sales process. Retailers will be able to integrate mobile wallets with their brick and mortar and ecommerce POS systems so that shoppers’ information and personal preferences will be available at every touch point.

Reduce Credit Card Fees with Stored Value Cards
If retailers start using mobile wallets in their mobile payment platforms and nothing else, they’ll reduce friction and drive sales—but they’ll still be leaving money on the table. After all, any transaction completed on a mobile wallet using a traditional credit card is still subject to credit card fees. In the age of mobile devices, retailers can bypass these fees altogether by leveraging stored value cards.

The same technology that brought stored value cards like digital gift cards to retailers is now being leveraged to enable payments from mobile devices. Rather than use cash or credit cards, increasingly more consumers are preferring to use digital gift cards within a retailer’s mobile app to make payments at the point-of-sale. This is particularly on the rise at places where consumers make frequent small purchases, such as quick service restaurants, coffee shops and convenience stores. Not only does this offer convenience for the customer, but it also offers benefits to retailers, including reducing credit card fees and opening new opportunities to promote customer loyalty.

What’s more, when money is low or has run out on a consumer’s digital gift card, they can easily reload funds onto it. In fact, many consumers have found reloadable digital gift cards to be an easy way to budget their spending. Loading and reloading a specific dollar amount onto their digital gift cards helps restrain them from spending over that amount weekly or monthly.

Driving Loyalty Through Convenience and Data Collection
Reduced purchasing friction from mobile wallets and reduced fees from mobile stored value cards are enough to make mobile payment opportunities worth pursuing—but they’re only just the beginning. The ease that each tool creates for shoppers fosters loyalty among customers.

Consider mobile stored value products. When shoppers know they have money to spend at a given retailer, they return again and again. Let’s return to Starbucks as an example. Stored value cards now account for approximately one-third of all Starbucks transactions, adding up to about $2.5 billion last year.

Convenience-driven loyalty is valuable, but the real power of mobile payments is that it empowers retailers to collect data that can be used to change consumer behavior and promote customer loyalty in ways that have never been done before.

For instance, once customers get in the habit of completing transactions using a mobile wallet or mobile stored value card, it’s easy to gather data on common purchases and to use that data to promote offers and specials through push notifications on a mobile device. All coupons and offers can stay saved right in the mobile wallet, so consumers never have to worry about paper coupons. The promise of future offers has the effect of driving customers back to retailers again and again.

A Call for Smart Retailers: Get a Head Start
While mobile payments are certainly on the rise, they remain a new technology ripe for disruption, customization, and innovation. The potential for mobile payments to change the way transactions are completed in every industry has yet to be tapped. Savvy retailers who take steps today to enable mobile payments will be better equipped to drive customer loyalty immediately and well into the future.

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