Mobile payments are far from new. Credit and debit cards have been tied to mobile devices and used in card-free transactions for more than a decade now, but they still account for an almost negligible percentage of all payment transactions. Why have consumers been so slow to adopt this new technology?
As is often the case with new payment technologies, there’s a chicken-and-egg battle going on to convince both consumers and retailers to adopt the new methods.
People might disagree about just how much more convenient it is to pay with a phone versus a plastic card, but there’s no debating that mobile payments are more secure than their traditional “card swipe” counterparts. There are two factors to this enhanced security. First, every transaction can easily be made to require a pin code or thumbprint. Second, the major mobile payment providers like Apple, Google, and Samsung all use tokenization to ensure the card number isn’t stored on either the consumer’s phone or the retailer’s POS terminal.
One other critical factor that cannot be ignored is the rising tide of smartphone usage in our daily lives. Many consumers today are always within two feet of their mobile devices. Virtually every aspect of their daily lives is augmented in some way by these devices, and there’s no sign this trend is slowing down. If mobile payments are convenient, safe, and available from a critical mass of retailers, a shift toward them is inevitable. As this happens, connecting loyalty to payment methods is a big opportunity for forward-thinking brands.
For more on how to turn mobile payments into loyal customers, read Stephan Schambach's new book Makeover: How Mobile Flipped the Shopping Cart.