10 factors that will drive mobile payment adoption into the mainstream

South African consumers have been caught up in a whirl of excitement around mobile payment solutions with the launch of no fewer than three major players: FlickPay, Snapscan and Zapper. While each of the services offers something slightly different to consumers and merchants, their collective value in driving adoption of this new technology cannot be understated.

Suddenly, every food stall, restaurant, coffee shop, farmers’ market and even our local doctor now proudly offer customers the opportunity to pay for goods and services with their mobile phones. Consumers are clearly enjoying this new, secure way of paying – just look at how many people whip out their phones next time you visit a market or a vida e caffe, for example

But while payments are getting the lion’s share of attention right now, there’s a lot more untapped potential in mobile phones as a transactional device. Mobile transacting encompasses everything from mobile payments and money transfers to coupons, loyalty discounts and rewards.

Today’s mobile phones are more lifestyle enablers than communication devices, facilitating behaviour from content consumption (and creation), to search, discovery, comparison and purchasing. All of which is great, but what will it take for people to truly abandon their leather or canvas wallets, bulging with debit cards, credit cards, loyalty cards, store cards, coupons and cash?

According to former Intel CEO Andy Grove, any new technology that aims to achieve mass adoption must provide an experience that is at least 10 times better than the current one. He calls this the 10x factor. It’s an interesting view and one that I think requires consideration particularly in relation to mobile payments, where two deeply entrenched behaviours – paying with cash and cards – are to be dislodged. For mobile phones to show a 10x factor and replace the traditional wallet, I believe consumers need to be given the following benefits (some of which are only possible through true point-of-sale integration):

1. Security

Mobile payment apps remove the need for carrying cash, which reduces security risks to both consumers and businesses. There’s also no physical exchange of bank cards or any entering of PIN numbers into merchant devices, reducing opportunities for fraud. New biometric scanning technology also promises previously unseen layers of security.

2. Speed

Mobile is fast. Instead of rifling through your wallet trying to find the correct amount of cash or the appropriate bank card to pay, and then searching for your loyalty card to earn points, you simply pay with your phone where all your customer data is consolidated. The actual transaction time itself, from authorising to confirmation is also far quicker than a typical card transaction.

3. Convenience
Wallets today are bulky, heavy things, laden with coins, cash, credit and debit cards, loyalty cards, receipts, scribbled shopping lists and pictures of your family. Your phone is in your pocket anyway – why not travel a little lighter by leaving your wallet at home?

4. Budgeting
A slew of modern budgeting and expense tracking apps empower consumers to make smart financial decisions by providing real time data. And by paying with your phone, you have a transaction history with you at all times – no more waiting for your monthly bank statements and doing a tedious month end tally up of your spending. (POS integration required for detailed transaction history).

5. Loyalty
Consumers love the benefits that come with loyalty programmes, but who wants to keep a bunch of store cards in their wallets? Mobile payment apps should focus on integrating existing loyalty cards to add a layer of convenience to consumers’ lives. (POS integration required)

6. Automatic discounts
Redeeming a coupon often depends on you remembering to keep it at hand when you make a purchase. By integrating discounts and loyalty into mobile payment apps, consumers can enjoy instant rewards, and know that they’re paying the minimum amount required for that particular purchase, with no hassle and a single payment and redemption. (POS integration required)

7. Cool factor
This is probably more relevant in urban areas, but most young people are loathe to miss out on exciting new technology – this is, after all, the generation that birthed the term FOMO. With carefully constructed marketing, and a slick user experience, service providers can tap into the ‘cool factor’ of mobile payments to help drive mass adoption, particularly among the younger millennials.

8. Smart, personalised marketing
The amount of real time customer data on the average smartphone is staggering. Savvy service providers should tap into this by integrating their marketing and messaging strategies with purchase histories and spending habits to ensure customers only ever receive relevant ‘in-app’ marketing messages at the correct time. Personalised, targeted and highly relevant communication is a strong value add for a consumer.

9. Lifestyle integration
As mentioned earlier, the mobile phone is a lifestyle enabler and no longer simply a communication device. Smart mobile payment service providers should build apps that interact with other lifestyle apps on a user’s phone. For example, making a mobile payment for your lunch could trigger an alert on your fitness tracking app reminding you of your dietary goals. The potential for cohesive integration into a smartphone user’s daily life is endless.(POS integration required)

10. A completely digitised wallet
The final frontier for mobile wallet advocates is to integrate the rest of the essential real-world items into mobile phones. Most people have their driver’s licence in their wallet – a smart provider would find a way to integrate the licence cards with mobile phone tech. The new smart ID cards currently being rolled out to SA citizens could also potentially be digitised to add more convenience to customers’ lives. Mobile payments can only benefit from the mobile phone completely replacing the whole of the wallet and not simply the transaction element.

While the above ten factors are all driven by advances in mobile phone technology, there’s another unseen layer of technology that makes at least half of the above list even possible. The increasing pervasiveness of an open and interoperable mobile transacting platform integrated at the point of sale enables retailers, marketers and brands to develop and successfully run hugely effective mobile transacting offerings, strategies and campaigns that unlock massive value for consumers. Retailers that enable this in-store now stand to win in the long run as they are able to augment mobile payments with related and relevant value added benefits.