It’s becoming increasingly evident that payments, commerce, tech and mobile are colliding at the intersection of innovation, but how those industries will evolve has yet to be seen. But today’s innovations are paving the way for what’s to come in 2016.
From the perspective of PayPal’s Bill Ready, SVP and global head of product and engineering, truer words have never been spoken.
“For years, we’ve been talking about the rise of mobile, the fact that mobile is eating the world and that the lines between the future of technology and the future of mobile are blurring.”
Citing the “next generation of commerce” — which is what he calls companies like Uber and HotelTonight — Ready emphasizes how mobile is changing the way consumers engage with commerce. Beyond that, mobile is innovating how consumers in both developed and emerging markets are able to buy, browse and pay for goods and services.
“The spread of mobile across developing and emerging markets is enabling more financial inclusion, and commerce and payments platforms are democratizing access to mobile tools that were once reserved for only the largest commerce players,” Ready told PYMNTS. “Mobile is driving innovation, inclusion and democratization across industries and geographies, but mobile is only operating at a fraction of its potential.”
To understand better how mobile will evolve and what innovations it will fuel, Ready shared his thoughts on the subject with PYMNTS.
PYMNTS: To use your words, mobile is “eating the world.” But how big is the world’s appetite? How will mobile buying grow in terms of an overall share of mobile browsing?
BR: Though mobile has been the next big thing for some time now, the reality is that we’re only in the first inning. Today, mobile accounts for just 1 percent of all commerce and 10 percent of eCommerce. But Forrester forecasts mobile commerce will hit $142 billion in the U.S. next year, representing more than one-third of online transactions. And, in the U.S., an increasing percentage of sales will have a mobile cross-channel component, as consumers increasingly turn to mobile at some point throughout the purchase cycle.
So, what is driving this increase? Mobile conversions will grow because of increased trust and convenience, a rise in contextual commerce enabling people to buy in the moment and growth in services that reduce friction on mobile. These services include emerging digital wallets and why we have invested heavily in bringing tools like PayPal’s One Touch to more and more merchants. Giving customers the ability to check out on any digital device without having to type in any usernames, passwords or payment information will only, we hope, drive those numbers even higher.
PYMNTS: Retailers really want to own the customer experience and, therefore, the apps that become the platform that enable that in a mobile-eats-the-world future. What’s your view on how retailer apps impact the growth of mobile in the physical world?
BR: Mobile commerce adoption started online, moved in-app with mobile-first apps, like Houzz and YPlan, and is now starting its initial moves in-store, as retailers realize their customers expect to be able to browse, shop and buy on their phones in any context. But unlike online and in-app, where the payment piece was a major hurdle, the payment piece in-store has never been a pain point for consumers.
Customer-first retailers like Starbucks, Macy’s and Subway realize that to be able to engage with their customers on their mobile devices, they need to create apps that add services and functionality around the payment. As countless studies have shown this year, swiping a card isn’t a pain point for consumers, as in-store mobile adoption has remained flat. Integrating value-added services, like loyalty points, coupons/offers and order ahead capabilities that enable consumers to skip the line, does solve major consumer pain points. As retailers put out apps that enable these services, we’ll begin to see see an increase in in-store mobile adoption.
One of the things that will be interesting to watch is the real blurring of the on and offline words in store. We’re seeing that with mobile order ahead where — talk about eating the world — that experience is driving a lot of mobile adoption through the integration of payments and things like loyalty. We’re seeing that happen at Subway, with the help of Paydiant, and are adapting that experience as well in storefronts like Macy’s, where One Touch, plus Macy’s app in-store, equals a new way to check out.
PYMNTS: One of the areas that mobile is making a difference is in making a host of financial services available to the underserved. How important is mobile to solving the financial inclusion issues we see today, everywhere in the world?
BR: Mobile phones are increasingly becoming the remote controls with which we manage our lives.
By the end of 2016, Forrester forecasts that 4.8 billion people will use a mobile phone and smartphone subscribers will represent nearly half of the world’s population. Importantly, much of this growth will be driven by an accelerated adoption in parts of Africa and Asia, where mobile will serve as an access point to services and industries that people were previously left out of.
In Kenya, for example, eight in 10 people have access to a cell phone, even though they may not have access to banks or bank accounts. In rural parts of India, farmers are limited in what they can buy based on how much cash they have on hand and also face a range of risks associated with carrying cash. The spread of mobile globally will enable inclusion of those previously not part of the financial system.
Mobile will also drive financial inclusion across U.S. cities where bank access is limited or where banks are removing branches and ATMs. With the rise of mobile phones, people who didn’t have access to banks will now have the ability to collect and send money, transfer funds via P2P services and also easily send remittances across borders.
PYMNTS: We’ve heard you talk about this concept of mobile driving the “democratization of mobile apps.” What do you mean by that, and why is that an important concept?
BR: Mobile Web usage still dominates that of mobile apps, but mobile app usage is growing quickly, as consumers spend more time on a select few apps, like Facebook, Google and Venmo. Studies show that smartphone owners use an average of 24 apps per month but that the vast majority of time is spent on just five apps. But this convergence is partially due to the fact that not all players have access to the mobile tools needed to build their own apps.
In the next few years, eCommerce and payment platforms, like BigCommerce, Shopify and PayPal, we believe, will help drive democratization of the tools needed to create apps so that smaller players who weren’t previously part of the app economy can build apps to engage their customers.
PYMNTS: The big buzz now is Internet of Things, as well as the “on-demand” economy — more or less, the Uber of everything. Where do you see that driving payments in commerce in the years ahead?
BR: The world is growing more connected via the Internet of Things, and people now expect to be able to manage their lives via their mobile phones. Soon, I think, people will expect their devices will manage their lives for them, without prompt! Technologies exist today that enable us to pay across apps with a single touch, but that’s just the beginning. Our mobile devices already know enough about us to be able to facilitate a single transaction or even trigger a chain of transactions and experiences without prompt. And with the help of machine learning, our devices will not only know our past activity but also learn our habits and routines and begin to anticipate and predict our needs and preferences.
The connected IoT is already emerging, but in order to realize the full potential of a connected world, we need to put into place the foundational fabric on top of which the IoT will exist — a foundation that is open and agnostic and that enables the connection of all devices, all operating systems and all payment types so that transactions can happen seamlessly.
PYMNTS: Tokenization is a hot topic, even though it’s not a new topic. What’s PayPal’s stance on tokenization and its role in driving innovation forward?
BR: Tokenization has been around for more than a decade, but it has only recently gained mass attention with the influx of new digital wallets. At PayPal, we’re no stranger to tokenization! The PayPal digital wallet alone has tokenized well over 1 billion instruments, and Braintree has an additional 185 million tokenized cards.
As consumer demand continues to drive the instant and on-demand economy, contextual commerce experiences will arise everywhere — from social media platforms to email — and tokenization will be foundational to enable and support this. In the next year, tokenization will evolve to enable these new forms of commerce and will be applied and used in new and innovative ways.
Mobile has already done a lot to drive innovation, inclusion and democratization around the world, but we’re still in early innings. In the next few years, we’ll see mobile continue to rise in all of these areas and more.