We continue to be fascinated with the move of assets from physical to virtual. The cloud is now allowing us more flexible access to our files, music, relationships and videos. Generation X does not know a time when their finances did not live in what we now call the cloud. Tech companies, mobile carriers and the big credit card companies are now all competing to give us unprecedented access to seamless transactions to buy whatever we want wherever we want to buy it without ever taking out our traditional wallets. The digital wallet should do to the ATM what the mobile phone did to the pay phone. In fact, the Mobile Commerce market is expected to grow from $140 million in 2011 to $750 million in 2016 according to eMarketer. Let’s look at what makes this market compelling for the parties involved: consumers, businesses and technologies.
Technology providers
The fact is that there is a great opportunity for companies to provide transaction services, build new ad and content networks and also provide an unprecedented level of audience intelligence to businesses. Big credit card companies are getting involved because they need to protect what is currently theirs. Financial transactions via cards are their bread and butter.
Mobile carriers like AT&T own the network and already have the ability to do credit card interchange so why not allow the user the opportunity to add the charges to their phone bill instead of their credit card. This works very well in countries like Japan and the mobile carriers have an opportunity to add their own set of fees for the convenience. Technology companies are looking for ways to get a piece of each transaction while providing an experience that can eliminate the need for ATMs or for taking out a credit card.
They can also provide the means for mobile applications to enable mobile commerce via an API and also provide a level of analytics around recency, frequency and monetary that many companies cannot access Brands are looking first and foremost for ways to increase profit by decreasing interchange fees.
Brands
Brands are using these mobile commerce technology platforms to create a give-to-get exchange with consumers. They can now track consumer behavior (with permission) on an entirely new level. Businesses can now more accurately test, learn and optimize offers, deals and discounts to attract and retain customers.
Mobile Commerce technologies like
Square and
Dwollaallow merchants to accept payments on the go. Now, anywhere can be a store. Transactions are no longer tied to physical store locations because the cash registers of the future can fit in our pockets.The Digital Wallet is fast. It saves time at the point-of-sale through barcode scanning or Near Field Communication. Businesses can also save money on transactions through mobile commerce platforms that process credit card payments in bulk, dodging heavy credit card fees.Starbucks is a leader in the digital wallet space. It has released
a mobile app for iOS and Android that stores customers’ gift cards and loyalty accounts in a barcode on their phones. Customers approach the register, hold their barcode up to a scanner, and the amount of the transaction is deducted from their account. They can seamlessly add money to their accounts from their credit cards with a few clicks.
Consumers
With Digital Wallets, consumers get what they’ve always wanted–but on a new level–from businesses: deals and discounts. By allowing businesses to have access to their spending habits, social media profiles and location-based data, consumers can get personalized relevant offers. They load those offers to their digital wallets, and redeem them in stores in real-time.
Mobile payments also create a more seamless purchase experience. A well constructed mobile payment system reduces wait time at the point of sale. NFC receivers and barcode scanners are faster than credit card terminals at processing payment information. Customers receive their receipts via email and text instead of waiting for them to print.Finally, digital wallets are more secure than traditional ones despite general hesitation by mobile users. Fifty-six percent of consumers say they’re concerned with the security around mobile payments and 52% say they’re afraid their bank accounts could be exposed if they lost their phone (according to eMarketer). Consumers can lock their phones, preventing others from breaching their personal information stored on the device. Many of the mobile payment systems have layers of security built in. Consumers can quickly log onto a web experience and change their passwords or remove their credit card information from their accounts. Early adopters are coming around to the idea, with 57.8% of smartphone and tablet users saying they’re comfortable using mobile payments according to eMarketer.LevelUp is a great example of these benefits. Consumers receive an inverted deal as incentive to try a new restaurant or service. They are then rewarded for being loyal customers after spending a certain threshold of money with the merchant. At the point of sale, a merchant-side Android phone scans the consumer’s personalized QR code instantly. The consumer receives his or her receipt via email or notification. If a customer’s QR code is stolen, they can instantly reset their code on The LevelUp’s website.
