Mobile Payments Start to Take Shape
Once upon a time, customers had very few options for mobile payments. Today, the technology is improving rapidly and options are growing. More than a quarter (27%) of consumers plan to use some form of mobile payment solution in the next year. Whether that type of payment will be through Apple Pay, Google Wallet or CurrentC — or through digital gift cards — remains to be seen. And a new player has arrived on the scene as well: Samsung’s LoopPay.
LoopPay is unique because it piggybacks on an older, pre-existing technology that virtually every retailer already has: the magnetic stripe. With LoopPay, a metallic coil generates a magnetic current that transmits to the magnetic strip card readers found in most modern payment terminals.In contrast, Apple Pay and Google Wallet are mobile payments services that depend on NFC hardware — the phone communicates wirelessly with the contactless payment terminal.
In adidition, digital gift cards are a large part of the overall mobile payment picture. eGift cards are emerging as part of retail’s payment and loyalty solutions. For example, Starbucks’ reloadable digital gift card acts as a brand’s own currency to add efficiency and reduce cost at the point of sale. But customers must be incented to participate is such programs, so they are rewarded with some of that savings in the form of loyalty points and discounts.
But those plastic cards may soon fade away, replaced by digital counterparts. eGift cards provide always-there access to the money stored on them. Research from eGifter found that 53% of consumers have reached for a plastic gift card only to realize it wasn’t on them when they were getting ready to pay for an item. That dynamic has contributed to more than $27 billion in gift cards going unused from 2007 through 2013, with another $1 billion
in spillage expected this year. While current gift card laws have reduced such spillage, mobile wallets are poised to further correct the problem. Digital gift cards are designed to work in tandem with digital wallets; however, when plastic cards are in the mix, 40 percent of consumers are willing to scan them into a digital wallet to be certain that they always have their cards when they need them.
As retailers implement mobile payment technology, consumers’ willingness to use a particular type or types of technology will determine which ones stores ultimately embrace.