In 2007, the then CEO of Visa USA, John Philip Coghlan, said that “the convergence of payments and mobile communications is not just logical – it is inevitable.” That was eight years ago and lots has changed in both the payments and mobile industries, but that particular statement still rings true. It’s taken a while to take hold though, and mobile payments have been struggling due to lack of NFC infrastructure, bad user experiences and complicated onboarding processes.
But now we seem to be on the brink of a big shift towards the success of proximity payments, with Apple Pay leading the pack and virtually every industry group involved in the transaction chain is working feverishly to take a piece of the pie.
Proximity payments is the fastest-growing segment of mobile payments, according to technology researchers at Forrester. It’s thought that their use will outpace mobile P2P and mcommerce payments by far over the course of the next few years. By 2017, the market is expected to reach $90 billion, Forrester predict, and this will result in a “dramatic shift in share” when it comes to mobile payments.
This has of course been made easier by the enabling technologies that have emerged in more recent years such as HCE and Tokenization.
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But there is even a bigger opportunity with the new wave of customer-centric payments which bring a more personalized shopping experience, individual offers, seamless loyalty rewards and fast checkouts. We live in a world where convenience is everything. We’ve become increasingly impatient even as further technology has emerged to make life easier. Mobile and the cloud have conspired to ensure that the lines between work and leisure have become progressively blurred.
Mobile is central to all of this. Our smartphones are never far from our hands and have become our personal assistants, cramming all aspects of our lives – into one small device.
As such, we’ve also become much more amenable to the idea of making purchases from our phones.
For retailers and merchants looking to leverage the technology, a huge opportunity exists to implement proximity payments in an area where consumers are ready to make the transition. Since consumers are now accustomed to cloud-based services, it’s unlikely too that many will be so concerned with security as to question it. Consumers are relatively savvy to the kind of compliance and regulations that anything payment-related is subjected to.
It’s likely that those businesses that do offer their customers the ability to pay with their mobile, will gain a significant competitive advantage over those that don’t. Not only does it offer a more convenient means of making payment for the customer, but it also allows businesses to gather valuable data on their habits and create a personalized shopping experience accordingly.
Given the enormous growth that we’re expecting to see in coming years, as well as the growth taking place now, for retailers looking to accept proximity payments, now is the time to get on board.
Upnext is a market leader in service design for the mobile money industry. We understand finance technology thanks to our extensive experience. Contact us for more information about creating a mobile payment solution that’s innovative, intuitive and stands out from the competition.