Mobile Payments: How Urgent?

Mobile Payments: How Urgent?

Brett Conradt • Jan 14, 2016
Brett Conradt • Jan 14, 2016

Share

Mobile Payments: How Urgent?

Mobile Payments: How Urgent?

Mobile payments have been growing impressively, but recent estimates suggest they still represent less than 1% of total global retail sales. Many retail executives may be wondering whether the technology is worth bothering with in right now. We offer some guidelines to help them decide.


We’ve all heard lots of talk about mobile payments—paying at retail cash registers using a smartphone or other device that houses your credit-card and other information. Some are even equipping sales people with devices that can take payments right on the floor.


But is the technology more hype than reality?


Although they have been growing impressively, recent estimates suggest they still represent less than 1% of total global retail sales. Many retail executives may be wondering whether the technology is worth investing in right now. I outlined some guidelines to help retail managements decide in a recent piece on chainstoreage.com.


Mobile payment systems offer consumers benefits beyond simply storing credit cards, such as tracking loyalty points and shopping patterns, which help retailers better target promotions to individual preferences. But several factors are holding them back.


First, there is no clear winner yet in terms of which mobile-payments technology consumers and retailers should converge around, so many solutions currently compete for consumer and retailer buy-in. Second, these services often require hardware beyond what’s usually used for conventional checkouts; accepting multiple services would require retailers to cede more precious counter space.


So, for the time being, it’s not clear how the mobile-payments landscape will ultimately pan out. Should retailers be thinking of dipping a toe in the water now, or is it better to just wait? There are several factors to weigh:


Size

Technologies using mainstream devices such as iPads as receivers are relatively easy and low risk for smaller retailers to adopt, but buying them for checkouts across a large retail chain would represent a meaningful investment. Conversely, solutions built around scanning a bar code may only require some programming modification for larger retailers.


Cost

Equipment cost, logistics, and space requirements can vary among mobile payment technologies. If a chain is undecided about which technology to try, understanding these issues relative to that chain’s particular constraints can help drive decision making.


Tipping point

At what threshold does this start to matter to me? Each retailer will need to set its own hurdle at which it would consider mobile payments substantive, whether based on number of users, transaction volume, or share of wallet.


Competitors

Even if mobile-payment adoption isn’t economically attractive to specific merchant at the moment, it must be aware of what competitors or doing, to understand whether there’s a risk of losing customers to the chain down the street.


Customers

If a chain’s shoppers tend to be early adopters already using mobile-payment technology, it may have no choice but moving ahead. Similarly, relative costs of the different mobile-payment apps have little relevance if a chain’s customers have already migrated toward a particular solution.

Mobile payments are definitely something to keep an eye on over the horizon. Using the above framework and information from the signposts will let you know when you should get in to test and learn, so you can scale up to meet the customer needs.


Brett Conradt

EXPLORE STAX DATA ANALYTICS

Read More

Featured in Information Week: Get Ready for Software 2.0
28 Mar, 2024
Joe Anderson, Associate Director at Stax, expands upon Software 2.0, a new type of software that, according to its creator, Andrej Karpathy, “is written in [a] much more abstract, human-unfriendly language".
25 Mar, 2024
Stax recently provided support for LLR Partner and FTV Capital on the merger between ParkHub and JustPark. Learn more.
Trash to Treasure: Investing in the Waste Management & Recycling Industry
By Joel Slater & Sam McCabe 22 Mar, 2024
Stax experts Joel Slater and Sam McCabe share their insight on the market and value chain for waste management/recycling and how to approach the investment landscape.
Featured in Pitchbook: Vince Zosa's
By Vince Zosa 18 Mar, 2024
Featured in Pitchbook, "Unpacking the Rule of 40" by Stax Managing Director Vince Zosa discusses growth levers to outperform the metric. Read more.
13 Mar, 2024
Stax Managing Director Phil Dunne shared his thoughts with Electrical Apparatus, a digital magazine, about the future of EVs. Read more.
Rise of Shelf Intelligence Solutions in Retail & CPG
By Samantha Pinkes 08 Mar, 2024
In the dynamic landscape of retail and consumer packaged goods (CPG), retailers and brands alike have been adopting increasingly sophisticated analytic tech stacks to optimize business operations. As a result, shelf intelligence solutions are emerging as a key area of interest. Shelf intelligence solutions can supplement and contextualize the insights offered by other layers of retail and CPG firm tech stacks. In addition, they provide granular, and in some cases, real-time insight on shelf activity and customer behaviors that can supplement other data and analytics solutions employed by both retailers and CPG brands. For example:
Show More
Share by: