Aspiring mobile payment service companies should engage with retailers in determining market requirements to enable mobile phone-initiated payments and services at the retail point of sale.
According to a recent survey from Sybase 365, 40% of survey respondents cited the main inhibitor of widespread mobile payment adoption was a lack of coordination between key stakeholders, including mobile operators, merchants, payment processors, banks and developers. The call for an organized approach to engaging retailers comes from VeriFone Systems, Inc., the leading payment solutions provider in the United States. The company urges mobile payment industry participants to be careful of causing confusion or alienating merchants to the emerging technologies of mobile payment.
“This isn’t just an issue of adding an NFC reader, it requires deep software richness at the point-of-sale to interact with the smartphone and manage a services-based model encompassing new applications and deployments without disrupting operation of existing card systems.”
Responding to growing interest from major industry players intent on claiming a stake in emerging mobile commerce opportunities, VeriFone CEO Douglas G. Bergeron articulated key guidelines to ensure that mobile payments don’t follow the path of previous alternative payment schemes that only succeeded in alienating merchants. VeriFone supplies a large majority of card payment solutions employed in the U.S. by retailers large and small and over the past 30 years has led the way in retail adoption of new payment technologies.
“Emerging mobile payments platforms represent a leap forward in electronic payment transactions, but those who want to claim leadership in this space have to reconcile merchant resistance to the imposition of costs to implement new infrastructure that will be managed an increasingly complex environment,” Bergeron said.
“The retail point of sale represents a point of convergence for smartphone-initiated payments, social networking and electronic couponing, but it won’t happen if retailers are expected, on faith, to absorb the costs of making it work,” Bergeron added. “This isn’t just an issue of adding an NFC reader, it requires deep software richness at the point-of-sale to interact with the smartphone and manage a services-based model encompassing new applications and deployments without disrupting operation of existing card systems.”
Bergeron outlined six key “rules” that industry participants need to adhere to in order to ensure success of mobile commerce:
Rule #1: “Deployment and management of complex NFC technologies will require significant ongoing services from the retailer’s payment systems provider. Until retailers are assured of receiving real value from mobile commerce, service providers who stand to gain from either carrier fees, advertising revenue or transaction charges must be willing to bear the costs of this highly disruptive paradigm shift.”
Rule #2: “Mobile commerce must add value to the consumer. Tapping a phone is a gimmick, no different from tapping a card or fob. In addition to providing the ability to pay for stuff by phone, service providers and retailers need to provide real additional value –- such as coupons, loyalty rewards and discounts — for consumers to leave their wallets at home.
Rule #3: “Mobile commerce must be streamlined with existing POS services and managed well for the retailer. Retailers won’t tolerate the need for multiple methods of acceptance to accommodate what will become a wide array of mobile commerce schemes. All ideas, regardless of where or who generates them, must converge at a unified point-of-sale.”
Rule #4: “Mobile commerce must go from zero to 90 mph in five seconds. Consumers will not embrace mobile commerce without the confidence that it is being widely accepted. If it only works at a few select retailers, it dies a quick death. Ten percent acceptance is not sustainable.”
Rule #5: “Mobile commerce must be integrated with other forms of payment. Mobile commerce won’t lead to the quick death of plastic cards and must work with existing payment systems that are certified by all major processors and installed in the vast majority of large and small retailers.”
Rule #6: “Mobile commerce must be ironclad secure. Security, both real and perceived, is imperative to the adoption and sustainability of mobile commerce. Even minor setbacks in security could compromise consumer adoption and stop the movement in its tracks.
Bergeron’s rules are based on years of experience working with retailers to implement payment technologies and adapt to changing security requirements. As the trusted supplier of payment solutions, VeriFone has the ability to work with retailers and service providers in assessing market requirements and integrating existing infrastructure with complex new technologies required to make mobile commerce work smoothly.