Courtesy of 2nd Mobile Commerce
In today’s instant gratification society, consumers expect to have all information readily available at their fingertips. This usually comes in some way, shape, or form on a mobile device. A significant majority of corporations are working towards exceeding that “on the go” mobile expectation by making not only their company, their product and the valuable information available, but also enabling commerce and payment capabilities.
Chris Archer, Customer Management Editor for IQPC, spoke with Karen Webster, President of PYMNTS.com exploring the future of mobile commerce and payment strategies. Karen’s presentation at 2nd Mobile Commerce, entitled “What’s Next In Payments? Insight Into Driving Payment Innovation Through Mobile,” will cover various tools and techniques on positioning your mobile payment strategy to succeed.
——
Chris Archer: Hi Karen, can you start by telling us a little bit about your career background and the PYMNTS.com website.
Karen Webster: Sure. So, I’m also CEO of Market Platform Dynamics, which is a joint venture partner with PYMNTS.com that is pronounced payments but is spelled like payments without the vowels. PYMNTS.com is really an online resource for bringing news about what’s next in payments and innovation in payments to those who have an interest in that topic.
Chris Archer: Great. So, do you think customers will quickly embrace mobile payment technologies to a point where it’s considered a primary payment source, or do you think this is merely a trend?
Karen Webster: I think that’s a great, great question, and I would answer by saying, well, consumers already have, mostly because they use their smartphones today as a way to access the Web and conduct eCommerce. The most recent statistics that I’ve seen, that I think are credible, suggest there was about $3 billion of transactions that actually took place on mobile phones in 2010 primarily accessing websites through the mobile phone and conducting commerce, so certainly, that’s an indicator that mobile payments is here. So to the bigger question, whether or not this is a trend or a flash in a pan; I think it goes without saying that mobile phones are ubiquitous.
We’ve all heard the old adage that people would rather lose their phones than their wallets, and I think especially here in the United States, as the payment experience improves where people like to shop, whether that in the store or online; if that continues to improve, using the phone I think we’ll see that it will become an easier and more natural way to pay. I think we’ll see more retailers offering that option both at the physical and online point of sale.
Chris Archer: Thanks for that – you’re right, mobile phones are ever-present. So, what mobile payment tools are out there – from your research what’s the current trends? And for those looking for solution, maybe you could briefly explore what options are out there.
Karen Webster: I would say that there are four major types of approaches to mobile payments, let me say. So, I would think that probably the one that most people have heard the most about and are most familiar with is NFC (Near Field Communication), which is really about enabling handsets to transact at the physical point in sale via a contact list tap-and-go. That’s been talked about the most. I think it’s probably the one that’s gotten the least traction though on the merchant side, because it’s been difficult to convince merchants that there’s a business case for installing the necessary hardware at the point of sale to enable that kind of transaction to happen.
Now, having said that, I think that Google with its announcement a few weeks ago that suggests they’re going to subsidize the installation of merchant terminals and enable their Android phones to conduct commerce with an NFC platform, I think that’s the game changer potentially, in part because they’re taking the obstacle off the table of subsidizing the handset or subsidizing the terminals, and in part because they’re mashing up payments with offers and advertising which is of course, their primary business. I think that’s an interesting business model and an interesting way to bring mobile payments into the physical store front, so that’s one.
I think the second mobile payment approach is barcodes, and I think Starbucks has made a name for itself and certainly for that particular technology application when they rolled out the mobile barcode payment device, I guess a few months ago in all of their stores nationwide. So, it’s a way to use your phone to pay for your latte, but it also is a way to use what merchants have at the point of sale which is the scanner that didn’t require to install anything new, and they really didn’t require that the people working behind the counter learn anything new than they were used to doing in their normal day-to-day transacting with customers. So, I think that’s the second mobile payments application, and I think actually quite a good one because as I said, it doesn’t really require anyone to change a lot about the behavior that they’re most used to engaging in.
I think the third way that mobile payments is actually being deployed is with devices like what Square has manufactured and what Apple uses in their stores to check people out with phones that actually become payment terminals, so it’s the little dongle that plugs into the top of the phone that allows you to flip your card and obviously, software that enables signature and receipt printing and all of the things that you would expect when transacting in a physical point of sale. So, you know, I think that’s interesting.
In physical stores, I think it’s also interesting when you can think about how service personnel like plumbers an electricians can now all of a sudden accept credit cards which was very inconvenient before and micro-merchants like free market vendors and antiques vendors can also use their phones to accept cards as well, and I think the final point which is, I think where I started the conversation is using the phone to conduct commerce online, and I remember hearing a lot around the holiday season about how people would use their phones in stores to do price checking in physical stores and if prices are cheaper online, actually transacting on their phone in a store, unfortunately not with the merchant in which store they were standing, but I think, you know, another viable way to bring payments to the mobile phone, not necessarily always for the benefit of the merchant that is hosting that person at that point in time.
Chris Archer: I’ve also noticed something recently in some retail stores, you can “check-in” via your mobile or smartphone and the store will have a discount or promotional offer – which benefits both the consumer and gives external promotion for the retailer. I think it’s definitely changing the way we shop on our phones as well.
Karen Webster: Yeah, most definitely. I agree with that.
Chris Archer: Now what would your advice be for those businesses who have heard about mobile payments, and looking towards implementation, but they struggle with building a business case, or they’re unclear what solution is right for their business, what’s your advice on that?
Karen Webster: I think that’s a tough one. I would say that it I guess it depends on who you are and what your timeframe is. I think, you know, if you’re a retailer or a merchant, it’s indisputable that mobile payments will be part of your future, and I would say that the online solutions and the case that you just described which is an offers-based solution is certainly a lot easier to implement right now than those that are designed to turn phones into plastic cards substitutes for all the reasons that I mentioned earlier. I think it’s still really early and it’s really hard to predict what the clear and compelling mobile payment solutions case will be at the physical point of sale. I think we’ll get more insight on that in the coming months; certainly, it won’t be the coming years, but I think in the coming months, if we see some of these experiments like what Google is doing and what Starbucks is doing really generate traction and excitement and then put a little bit more persuasion around the business case that retailers are thinking about as they’re exploring their options on this particular topic.
Chris Archer: Okay. And I’m sure that the conference will go a long way and then kind of bringing the industry together to talk about these kinds of things, so…
Karen Webster: No doubt.
Chris Archer: What are the components of an integrated mobile payment strategy that if properly applied, would benefit an organization/retail brand?
Karen Webster: It’s absolutely essential, and I think that there are four things that I think become the attributes of a successful mobile payment strategy, and it starts with what you just described Chris, which is the offer. So, I think it’s a very self-explanatory but very important thing that retailers can do to create an incentive to drive a consumer to take action. So, whether that is blocking into your store showing an offer, getting some sort of incentive to take an action in the store that benefits that, that merchant, that’s pretty important, and that’s a very critical attribute.
I would say the second is data. I mean, data is really what will drive the offer, but I think there are so many interesting ways and applications that match up transaction data, preference data, location-based data, and increasingly, the preferences of friends, reviews and ratings; things that really create a way for retailers to drive those offers that really do have both relevancy and urgency attached to those consumers that they most want transacting with them.
I would say the third thing sounds kind of squishy, but I would say value… I think sometimes, we have the tendency to want to gravitate around a solution because technology makes it sound really cool and interesting, but we haven’t really thought specifically or deeply about what features and functions are really going to make it compelling for consumers and for merchants, and I think we’ve talked a lot about what makes it compelling for consumers, but merchants/retailers are a very important part of the mobile platform continuum and they have to believe that the investments that they’re making in mobile payments are going to come back to them in a rate of return that is acceptable to them.
So, I think, you know, there’s a lot to be said for really thinking about depending upon what kind of merchant you are, where you play and the value chain, what is it that is going to drive value to your consumers and what then will deliver return on that investment for you. And then finally, you know, it goes without saying you obviously need to have a way to transact, so there has to be an underlying payments mechanism that allows consumers to transact safely and securely and conveniently where convenience is also about the ability to make repeat purchases easily and for merchants to be able to process those transactions in a way that mirrors their existing transacting environment, so I think those are the things that I think would be a part of an integrated mobile payments strategy.
Chris Archer: Alright. Thank you for that Karen. We really appreciate you sharing your insights with us today. Good luck when you present at the conference in June.
Karen Webster: Thank you very much. I really look forward to being with you and to seeing all of the attendees. It will be a great time.
Chris Archer: Mobile Commerce is co-located with IQPC’s Pre-paid Cards and Mobile Payments. Karen will feature at both conferences. Visit www.MobileCommerceEvent.com or call 1800-882-8684.
Bio: Karen Webster is the CEO of MPD and has worked extensively with some of the leading players in the payments, B2B and technology sectors to architect, ignite and commercialize innovation. She also serves as a member of the board for several emerging companies in the payments, mobile and technology sectors, including PaySimple. Her work is focused on helping these innovators develop and implement sustainable business strategies. For this project, she would provide overall project direction – ensuring that deadlines are met and project quality is maintained, and be actively involved in the development of ignition strategies and go to market programs, including marketing and messaging.
Karen is a frequent speaker and author of numerous articles on the sources of innovation, strategy, loyalty, product design/bundling and pricing and platform strategies. She is a frequent keynote speaker on these topics and, for example, has moderated or spoken at CTIA for many years. Karen was a key contributor to Catalyst Code: The Secrets Behind the World’s Most Dynamic Companies, Harvard Business School Press, 2007 (written by MPD’s David Evans and Richard Schmalensee) and is credited with directing the research for the book and devising its trademarked 6-step Framework. Karen also served as an adjunct faculty member at her alma mater, Johns Hopkins University, where she developed and taught graduate level courses on business-to business marketing.
Karen has a long history of consulting experience, having served as the Managing Director of Global Marketing and Planning for PricewaterhouseCoopers’ US$6 billion management consulting practice. She led the firm’s eBusiness Strategic Marketing taskforce and created the strategic positioning and go-to-market approach for this firm-wide initiative. Karen later served as Chief Operating Officer for a US$125 million consulting subsidiary that is part of the MMC family of companies. In 2002, Karen launched her own B2B strategic marketing consultancy which later combined with MPD. She is a graduate of the Johns Hopkins University, where she also holds a M.S. in Marketing.
Karen’s recent work has focused on developing operational ignition strategies for large multi-sided platform players, specifically focused on devising the product, pricing/incentive and go to market plans to achieving critical mass associated with the introduction of new products in a very competitive marketplace.
We’re always on the lookout for opportunities to partner with innovators and disruptors.
Learn More