Mobile Payments

Reading The Mobile Commerce Tea Leaves 

Mobile payments have been the future of payments for a long time. For longer, in fact, than there have even been smartphones — PayPal got its start as a scheme to enable payments between PalmPilots (granted, it was a pretty short-lived scheme).

But the mobile ordering future has been a talking point for so long that over the last five years or so it has sort of started to feel a bit like a horizon — always out front, always coming but never actually arriving.

“I think to look at where we are now, everyone still kind of agrees mobile payments are going to happen, though it is also pretty obvious that it will take a lot longer than the most excited folks thought it might a few years ago when Apple Pay, Android Pay and Samsung Pay all hit the market back-to-back-to-back,” LevelUp CEO and Founder Seth Priebatsch told Karen Webster in a recent conversation about the future of mobile payments.

Their chat was a lead-up to a conversation that Priebatsch and Webster will have on mobile payments at Innovation Project 2017, but about a particular facet of mobile payments — one that makes payment the payoff to a point of friction for a consumer. One that Priebatsch said was born out of the realization that the slowness of mobile payments adoption is forcing everyone to recognize that the payment itself isn’t broken, and flipping the payments experience to a phone isn’t enough.”

Which is where mobile order ahead and the magic of line skipping come into play.

“A lot of our merchants have seen mobile order become so dominant that it is now an unusual experience to have someone [show] up to pay with a card.”

That won’t be the experience everywhere in retail, Priebatsch noted, but it is clear that the mobile evolution in QSR, at least, is on.

Changing Experiences in Different Verticals

According to Priebatsch, just looking at the data now makes it pretty clear that mobile order-ahead is likely to just keep growing market share over the next five years — and likely become how consumers become accustomed to paying for some things, particularly food.

“Restaurants have a fixed menu and there are only so many possible choices, so there are a lot of opportunities to create upsell opportunities for merchants and discovery opportunities for customers.”

Priebatsch gave the example of a customer who always orders a salad could have a paired soup recommendation, or the customer buying a burger could be offered a coke and fries. And those kinds of suggestions work, he said, increasing ticket sizes between 7 and 14 percent—mostly due to successful upsell.

But traditional retail, Priebatsch noted, is a very different story, even for someone like him who does as much transacting digitally as he possibly can. But, when it is time to buy new hiking equipment, where product inspection is important, well, that’s another story.

“I want to go to the store so I can get a nifty little gadget that is just a lot of fun — and I didn’t know I wanted — and because I value the advice of the knowledgeable sales reps who work there,” he said. “Until there is a chatbot that can interact with me the way I interact in store — and I can simulate the touch and feel of it. And since chatbots and VR aren’t there yet, I think those retail experiences will stay alive for a long time.”

That doesn’t mean the experiences won’t change — and that digital discovery won’t play a big part in physical retail — but that there are some experiences that are more likely to be modified than wholesale rewritten.

And even in areas where big rewrites are coming — like in food service, where he believes order-ahead is very likely to displace pay at the counter over the next five years — change doesn’t necessarily need to come like a wrecking ball and will likely phase in more subtly.

“Order-ahead isn’t just about solving a technical problem. It is a different consumer experience and interaction. It requires a lot of thought to do it very well. That doesn’t mean that stores need to wholly redesign. Obviously that is ideal, but as you’ve seen from Starbucks, they’ve been able to retrofit to enhance their existing locations so that they are seeing benefits and not doing some massive re-design.”

It’s about making mobile work, with the benefits realized as clearly as the costs. Future stores will be designed around an order-ahead world, but for the time being, the question isn’t about merchants doing a wholesale reset so much as it is about doing it as well as “Starbucks does it, or it will take a toll on your business.”

What’s Next

As Priebatsch and Webster were chatting — around lunchtime — he noted that as the conversation was unfolding “a whole bunch of LevelUp users” were getting a push reminder that their favorite burrito was available for order at Boloco, and that many of those users were likely to jump at the chance to order that lunch burrito.

“The goal is to be clever, not creepy,” he said.

And that, broadly speaking, is the goal and the future of mobile payments and order-ahead going forward: finding ways to forge better consumer relationships using all that data can offer so that the consumer is given an enhanced experience, and not one where they feel like they are being stalked.

Some things will become table stakes. In five years when everyone is offering mobile order-ahead as a service, it won’t be much more a differentiator than having a functioning credit card machine is today.

But there will also be chances for differentiation. Chatbots today, he noted, aren’t all that impressive, because they are essentially transliterating forms and spewing them back at consumers.

“When you can pretend it is human instead of translating a form into text, and it can tell you based on your past order what you might like, that is a different story. When the chatbot is able to be predictive, if you view the chatbot as your personal concierge that just wants to get your food ready on time — that is really useful.”

And, at the end of the day, being useful and accessible is going to be much of what the second act in the story of mobile payments and the future of mobile commerce will look like — not at all what anyone was expecting even a few years ago, but worth the watch.

As will be the conversation about it all at IP 2017. Won’t you come and join us?



The PYMNTS Cross-Border Merchant Friction Index analyzes the key friction points experienced by consumers browsing, shopping and paying for purchases on international eCommerce sites. PYMNTS examined the checkout processes of 266 B2B and B2C eCommerce sites across 12 industries and operating from locations across Europe and the United States to provide a comprehensive overview of their checkout offerings.

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