Bridging The Divide: How To Bring Consumers And Merchants Together On Mobile Payments

Mobile payments get a lot of attention — just not exactly from the right sources. They have been studied endlessly, invested in heavily, written about extensively and anticipated widely for at least the better part of the last decade.

But despite all the industry enthusiasm, two critical groups have remained largely unfazed by the emergence of mobile: merchants and consumers. The numbers among those two key segments continue to lag.

The good news, according to JPMorgan Chase’s Conrad Sheehan, is that there is some evidence that those figures are starting to shift just a little bit and that both consumers and merchants are actually starting to move a bit closer toward that long-forecasted mobile inflection point.

Sheehan is part of a firm-wide team that is leading the work on Chase Pay.

“If you think about where commerce is going, the direction toward mobile and digital is visibly emerging,” Sheehan told Karen Webster recently. “And that emergence is seen both anecdotally and in data itself.”

That data is reflected in the just released “Commerce Innovation Pulse” report, a commissioned study conducted by Forrester Consulting on behalf of JPMorgan Chase. Sheehan said it’s a tale of two mobile commerce realities: the still slow-moving present and a potentially rapidly evolving future. Mobile, he said, remains in the early innings of the game — with a move toward the middle innings that is accelerating faster than anyone had expected.

The Challenges At Hand

The proof of mobile payments still in the process of gaining momentum is in the numbers, which will seem rather familiar to anyone who has been following headlines on the subject for the last several years.

The JPMorgan Chase commerce study, which included 1,500 consumer participants and more than 800 merchant participants, reflects a similar reality.

Only 15 percent of consumers name a digital wallet as one of their top four payment methods — mobile wallets are literally as popular as the long-derided paper check. Consumer favorites — beating out digital wallets by a wide margin — are debit cards (62 percent), credit cards (46 percent) and good, old-fashioned cash (53 percent).

The top reasons consumers have not used a digital wallet are: concerns about security (46 percent), they haven’t taken the time to figure it out (40 percent), and they don’t think merchants where they shop frequently accept digital wallets (23 percent) – though the report also shows that 36 percent of merchants do accept digital wallets.

On the other side, merchants face their own barriers to updating their POS to accept mobile payments. Their top reasons includes: costly upgrades (large business at 35 percent, small business at 39 percent), customers are not asking for it (large business at 24 percent, small business at 39 percent), and integration to their current system would be difficult (large business at 30 percent, small business at 20 percent).

“We’ve been hearing about these challenges for a while,” Sheehan noted.

But there is more to the story than meets the eye — while mobile adoption is sub-ideal, mobile awareness is progressing apace.

“If awareness is a prerequisite to action, we should take this as a positive,” Sheehan told Webster. “These are exciting times.”

Getting To ‘More’

The data, Sheehan said, makes one thing clear: Mobile can do a lot, and what it does, consumers like. Faster payments, VIP benefits, rewards, enhanced transaction security, ability to skip the line — all things that mobile payments can and do power that have some ability to move the needle on consumer behavior and the behavior of early mobile users a whole lot.

But the digital wallet features for consumers are meaningless if they don’t use them, don’t know they can use them or aren’t aware any opportunities via mobile exist. However, when consumers are aware, more than half (54 percent) are happy when they pay with a digital wallet.

Rewards points (36 percent), discounts at purchase (35 percent) and faster checkout (32 percent) are the top features that consumers said would incentivize them to adopt mobile payments. However, merchants are more motivated to adopt mobile payments by being more efficient with faster checkout (51 percent), meeting customers’ demands for a better shopping experience (44 percent) and more security features (40 percent).

“The mobile digital experience has to be broader, and that’s echoed in this report,” Sheehan said. “Consumers have to be engaged and informed well before the point of payment. If you don’t have a user engaged in some way in the act of commerce, whether it’s in a store, online or in a vehicle at some point, your chances of converting them in the last centimeter is low.”

Building A Different Future

Consumers are looking to get past the traditional paradigm of payments, where they aren’t changing what they do so much as they are changing their form factor, said Sheehan.

Building those experiences that will help drive adoption is where their merchant partners come into play, helping them find the business case for incorporating the full power of digital systems for payments, marketing and consumer engagement, as it is about merely packing digital wallets with features. According to Sheehan, it isn’t about a relationship between a customer and a payment method; it’s about facilitating a relationship wrapped around a transaction between a consumer and merchant.

But, Sheehan noted, there is a fair amount of power packed here simply because of the size and reach of the JPMC payments machine. As a large merchant issuer and acquirer as well as with a large consumer banking and cardholder presence, Chase is uniquely positioned to deliver a mobile payment solution.

Payments are a simple act for consumers — swipe, dip or tap and presto, it’s done – but for merchants, the simple act of taking tender at a store is a “multilateral consortium of people coordinating to get a transaction done.”

Now looking ahead, consumers believe there will be an increased in usage of mobile wallets in the future, and merchants will be ready to meet that demand. According to the research, 39 percent of consumers are likely to sign up for and use the latest digital wallet over the next year, while 59 percent of merchants plan to update their POS systems in the next year.

No mystery there, but a lot of work to do — given that, by the numbers, mobile payments are in early innings. But as this new report shows, the early innings are winding down, and the winners in the middle rounds aren’t just thinking about the “how” of consumer mobile payments — but now also about the “why.”