Why bother using a $600 mobile wallet–equipped smartphone when a $2 debit card can do the job? According to Verifone’s Chief Strategy Officer Vin D’Agostino, it’s a question innovators haven’t yet answered fully but are honing in on. Check out Karen Webster’s interview with D’Agostino in the April mPOS Tracker™, along with a provider directory of over 260 major players and headlines from around the space.
A world without checkout lines and a farewell to the fat wallet were just some of the tantalizing outcomes foreseen as mPOS devices started to make their way into retail stores years ago.
Alas, consumers and merchants are still awaiting the realization of the envisioned blissful, wait-free retail utopia that was envisioned a while back.
Even as mobile payment technology lets consumers pay with their phones and allows merchants to accept payments away from a cash register, the tech is seemingly still some distance away from replacing legacy payment models.
And, at least partially as a result, mobile wallet adoption in the U.S. still lags.
The reason behind the lack of adoption, as Verifone’s Chief Strategy Officer Vin D’Agostino explained, is straightforward: There’s no real compelling reason for consumers to ditch their credit and debit cards for modern replacements. Even with all this technology, he believes, mobile payment systems often fail to offer consumers any more value than the legacy systems they replaced.
However, all that, D’Agostino said, is starting to change. Technology providers and merchants are beginning to realize that the key to making consumers change their ways is contingent upon making the switch worthwhile, and that could soon lead to another mobility-fueled retail revolution.
Going from accepting payments to adding value
While we aren’t living in the mobile payment wonderland that many envisioned when the technology first came to retail stores, D’Agostino said, mobile devices have surely made their presence felt in the retail industry.
“I think mobility has changed the merchant experience across the board, from tier one to the smallest of merchants. You’ve seen a real redefining of what it means to check out in the store,” D’Agostino said. “I think it’s really redefining the shopping experience — it’s defining in-store commerce, and it’s enabling a trend that’s been going on globally for a long time, which is the ‘electronicization’ of payments.”
However, D’Agostino said, these devices have not gone far enough when it comes to replacing old forms of payments. They may have changed the game for retailers, but most have not added value to the experience for consumers, he said.
In case of mobile wallet adoption, for example, even as consumers utilize smartphones for a wider range of commercial uses, using them for making payments isn’t always their top choice.
“When you think about mobile wallets,” he said, “the 1.0, initial version, was all about payments. Initially, your $600 phone with a mobile wallet could only do what your $2 debit card could do, only the debit card was accepted everywhere.”
Meaning consumers didn’t see a value in giving up their payment method — something businesses are now beginning to realize as they look for ways to deliver more value to consumers through mobile devices, D’Agostino said.
“It’s actually enabling a redefinition of what a ‘payment device’ is, because taking payments, more and more, just is not enough,” he explained. “Originally, mPOS was about taking payments — it was about checkout and redefining that, changing it from the counter where people waited online to taking sales associates out from behind the counter and putting them on the floor. But, I think, the next trend is going to be around engaging experiences using these mobile devices.”
Building better in emerging markets
This focus on value addition can already be seen in economically weaker markets, D’Agostino said, where modern payment technology is only just now reaching retailers.
For instance, in India, where the government is encouraging consumers and businesses to adopt electronic payments as part of its demonetization movement, mPOS manufacturers are working to support new use cases to make the switch to mobile payments a valuable change for consumers.
“When it comes to an emerging market like India, it’s not just about payments,” D’Agostino said. “We talk to our clients in India, and they want to do other things with the payment terminal.”
And as long as it helps them efficiently operate and expand their businesses, merchants in developing economies are open to the idea of using electronic payment systems for a wide range of purposes, he said.
“Right now, paying bills in India is a real problem, and you can accept bill payments on a Verifone device. I’ve even seen people managing a store using Verifone’s device, entering cash purchases on an electronic payments device, because it’s the only way they can have a record of the sale.”
What’s next for mobile payment devices and mPOS systems?
Over time, as the existence of mPOS devices becomes increasingly commonplace, merchants will need to be further aligning to the needs of today’s increasingly mobile-savvy consumers who expect everything from brand loyalty to mobile payments at their fingertips, D’Agostino said.
Many retailers, however, do not accept mobile payments despite having the technological means to do so, and retailers remain uneducated about the technology and its use cases.
“It’s about increasing the amount of acceptance. It’s improving, but you know there are a lot of places that have still not turned on the chip sets in their devices to accept contactless payments, but that’s changing,” he said, noting that companies, including Verifone, are looking at opportunities beyond just payments. “We’re spending a lot of time figuring out how to make a mobile phone interact or engage with an in-store checkout device beyond payments.”
According to D’Agostino, increasing adoption means giving consumers a reason to change the way they pay for purchases.
“What I see now, is that the type of applications and consumer benefits that are starting to come embedded with a mobile wallet are making it a much better experience than I get with my $2 card,” he said. “As those things take hold, I think that will actually start to change and improve the value proposition to make it more likely that consumers will actually use the mobile wallet.”
It sounds as if the mobile revolution may just be getting started.
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