What does it mean to future proof your brand? It means making sure your company adapts to the ways consumers want to interact with your brand. The consequences of not future-proofing your brand can be dire. You do not need to look any further than CompUSA and Circuit City, two of the largest consumer electronics stores of the last 30 years. Collectively these companies had almost 1,000 retail locations in the U.S. and Canada, and a combined market cap of $3.5 billion at their height in the early 2000s.
In our last Future Proofing Your Brand blog post, we wrote about how a company’s choice of how to reach their customers in the mobile channel – a mobile friendly website versus a native app – could determine their success or failure. Today we will discuss an equally important step in keeping your firm out of the dead pool – responding to advances in the payments world that offer both added convenience and safety to traditional payment card transactions.
Mobile payments are far from new. Credit and debit cards have been tied to mobile devices and used in card-less transactions for more than a decade now but they still account for an almost negligible percentage of all payment transactions. So why have consumers been so slow to adopt this sexy new technology? As is often the case with new payment technologies, there is a chicken and egg battle to convince both consumers and retailers to adopt the new methods.
For consumers, this means trusting the new technology, recognizing a compelling enough benefit and then changing their habits at the point of sale. For retailers, it means something even more tangible – spending the money to update their POS equipment. Despite these headwinds, we see a seismic shift in mobile payment adoption over the next five years, and here is why:
- Mobile Payments are Getting a Free Ride with Retailers: If mobile payments are not broadly accepted at retailers, then there is little chance that consumers will get excited about the new payment method. In 2015 and 2016, mobile payment providers like Apple Pay and Android Pay are being provided with a once in a lifetime opportunity, because retailers are already spending the money to upgrade their POS environments to be compliant with the new card association mandates to accept EMV (chip) cards. So, the logic with retailers is simple – if I am going to spend the money anyway, I might as well look for a solution that is mobile payment friendly as well.
- The Consumer Benefits are Finally There: Folks may disagree about just how much more convenient it is to pay with a phone versus a plastic card, but it’s hard to debate that mobile payments are actually more secure than their traditional “card swipe” counterparts. There are two factors to this enhanced security – 1) every transaction can easily be made to require a pin code or thumbprint, and 2) the major mobile payment providers like Apple, Google and Samsung all use tokenization to ensure that the actual card number isn’t stored on either the consumer’s phone or the retailer’s POS terminal.
There is one other critical factor that cannot be ignored, and that is the rising tide of mobile phone usage in our daily lives. Many consumers today are always within two feet of their mobile devices. Virtually every aspect of their daily life is augmented in some way by these devices. And, there is no sign that that trend is slowing down. If mobile payments are convenient, safe, and available from a critical mass of retailers, then a shift towards them is inevitable.
Check out our next installment of Future Proofing where we discuss shipping methods.
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