Don’t ever say kids these days have no appreciation for technology.
One day, Jon Rosner, vice president of Product Strategy, Card Services at Fiserv, took his 12-year-old daughter to Dunkin’ Donuts. Rosner ordered, collected their donuts and squared up with Apple Pay. His daughter said it was the most amazing thing she’d ever seen. Why would he ever use his credit card?
This coming from a girl who has never lived in a world without the iPhone and all the technological magic it, and other smart devices, can deliver. Rosner asked her why she thought it was so amazing that the device could be used to pay for donuts.
“Because it was so much easier,” she explained. Obvy.
To pay with his credit card would have required taking out his wallet, handing off the card, taking it back, accepting the receipt and finding a place to put it: a veritable Rube Goldberg machine of payments. Meanwhile, said his daughter, the phone was already in his hand, ready to be used — ready to help reduce payments friction in his life.
Well, she may not have used those exact words, but that was the gist, Rosner said.
So, if mobile wallets really make life that much easier, why hasn’t every consumer embraced them? Rosner has a theory, and it’s based on online banking adoption from 1998 to the present. Yes, a 20-year span, but look at online banking today: It’s nearly ubiquitous in the U.S. Maybe decades are the key behind any innovative technology that becomes not just a fad, but a trend with staying power.
In a recent discussion with PYMNTS’ Karen Webster, Rosner explained why he thinks the mobile payments trend could one day reach ubiquity.
Mobile Wallets Vs. Mobile Payments
The conversation is not just about the Pays (Apple, Android and Samsung in particular), Rosner explained, but rather about mobile payments as a whole — something that goes beyond eWallets to encompass any payment or commerce transaction performed via mobile.
Over the next two to three years, half of all online spending will come from mobile, he said. In-app payments have seen strong adoption, and the Pays can help make that even easier by enabling users to enter credentials once and skip the hassle in the future.
Webster noted this is the same reason card-on-file methods remains popular. Not everyone loves the idea of storing sensitive payment data on a commerce website, but it sure makes for an effortless checkout process.
Paying Like It’s 1998
Online banking existed in 1998, but not to any extent that was useful to most people. The average consumer was still using dial-up internet, and DSL was just making its debut. Banking online really just meant customers could check their balance without going to a local branch or ATM, and that was it.
As the internet got faster, digital banking became easier and more robust. That drove adoption, which drove further innovations in the technology.
Eventually, customers could go online for most of their banking needs, from paying bills and transferring funds to shutting down cards that saw unauthorized activity — in short, all the fabulous and convenient capabilities everyone now takes for granted — and it’s all moved from online to mobile, making digital banking even easier to adopt and love.
Apple Pay, the firstborn among mobile wallets, launched in 2014. Only a handful of retailers were accepting it, and only a few consumers had access to it — i.e., those who owned the latest iPhone — so there was not much reason for either party to embrace it.
Today, it’s hard to find an Apple product that doesn’t have Apple Pay built in, an Android without Android Pay or a Samsung device without Samsung Pay. Fifty percent of the top 500 retailers are now accepting eWallet payments in stores.
And yet, consumers still aren’t in love, especially when they’re shopping in a physical store. They still don’t see the value, though Rosner said merchants and consumers are beginning to. The foundation has been laid. The adoption hasn’t happened yet, but he’s confident it will — in time.
It’s not easy being easy. Typically, the less friction a customer encounters in a mobile app, eWallet or digital banking experience, the more effort must have gone into developing that experience behind the scenes. However, the payoff for reducing that friction can be huge.
Consider stopping at a coffee shop, Rosner said. Standing in line is a major friction point, and it can lose a brand business — not just today, as customers see the line and walk away, but tomorrow, as they recall the negative brand impression and consider other options.
That’s exactly what was happening to the international coffee chain, Starbucks, before it launched its mobile app. Once introduced to that low-friction solution, however, it lured customers back in with the promise that their drinks would be waiting for them when they stopped by on the way to work — and the promise of free drinks and other rewards for frequent visitors, of course.
It wasn’t long before Dunkin’ Donuts introduced the same functionality in a mobile app. What these two coffee giants and others have discovered with mobile order ahead is that the offering not only reduces wait time and friction, but also encourages customers to order more because it’s so much easier to add items.
Conversely, financial institutions and service brands that do not go the extra mile to eliminate friction may continue to lose business because of it. Consumers are easily distracted and may not be willing to jump through hoops. It’s up to each business to determine where it can reduce pain points, and where those points are necessary to keep customers and their data safe from fraudsters.
The Path of Least Resistance
Rosner compared financial services friction to a beautiful park or college quad marred with an ugly dirt path leading between two perfectly functional paved walkways.
Why? Because the structure in place was not serving people who were trying to get to a certain destination, said Rosner. The best parks in the country don’t have these dirt paths because they see where these paths are appearing and pave over them. They look at what users are trying to do and respond.
Financial institutions and brands must do the same thing if they hope to truly serve customers going forward. Fiserv has been tracking consumer sentiments for decades and has noted a growing trend of consumers wanting more control, Rosner said.
Customers want tools that keep up with their busy lifestyles and make it easier for them. Not everyone is signing in to view bank statements online every month. Mobile solutions must fit consumer expectations to be able to access everything they need on the go.
On top of that, they want security. People are much more aware of data security than they used to be, thanks to the tidal wave of breaches that began a few years ago. Many feel better having an “off” button so they can shut down the card if all else fails.
Fiserv aims to give them both with its CardValet® product, and Rosner admits the way consumers are using the product is different than originally expected.
Messaging That Fits
When CardValet first launched, Fiserv was focused on how alerts could be used to let customers know they had triggered an account control with their own spending. It was only later that the company discovered how people were actually using its product: not for the occasional trigger alert, but for ongoing transaction monitoring — that is, they received an alert for every activity conducted.
Rosner said a consumer who’s engaged in monitoring their own transactions and receiving alerts for every purchase is one of the most powerful tools in the fight against fraud, because he or she will notice at once if he gets an alert for a transaction they didn’t authorize. That’s where the “off” button comes into play: A negatively impacted card can be shut down right away, before any further purchases are made.
Fiserv re-messaged its CardValet value proposition in response to demonstrated consumer priorities, Rosner said. The new messaging was more human-centered. The product was the same and delivered the same control, but the key was to put it in a context that made sense to the consumer.
Driving adoption of mobile payments and eWallets will need to follow a similar philosophy, he explained. The industry must listen to what consumers are trying to accomplish with these products. Then, it must pave the worn dirt paths.