Developments in technology and their impact on mobile commerce are proving exciting. Ritesh Gupta takes a look

It seems that technology savvy customers have finally given the nod to making payments via mobile apps. This is being driven by the growing popularity of one-click mobile payments. In addition, as express checkout options expand, and payment mechanisms become simpler, users will become less hesitant to pay via mobile. Simple steps like doing away with the need to re-enter personal information again and again and working to ensure that customer’s data is immune to security threats, are two examples of such moves.

Daily acceptance

The more seamless the mobile payment experience, the more one can hope for the growth of m-commerce.

“Clearly mobile commerce is reaching a high degree of penetration in our everyday lives and in my opinion it is still just the beginning of this trend. Next year will see a huge impetus in payments going mobile for almost all use cases of our day to day lives,” predicts Kaushal Kantawala, Mobile Engineering Lead at Checkmate, an independent division of Room 77.

At the beginning of this year, Kantawala used his credit card to pay at Starbucks, Walgreens and Target, but when he flagged down a cab he paid in cash. “I also paid in cash at most food trucks in San Francisco which I frequented for lunch,” he says. Less than a year later, he pays for coffee using a Starbucks virtual card in Passbook, pulls out his Google Wallet for groceries and gets around using Uber or Lyft (a ride-sharing service) and pays for it using their mobile app. He is also comfortable using Square, a mobile card reader that allows merchants everywhere to take mobile payments. “I don’t find the need to visit the ATM as often as before and I don't find a pile of crumbled credit card receipts in my pockets,” he says.

According to Glenn Gruber, AVP, Travel Industry Practice Leader & Mobile Solutions, Ness Technologies, mobile commerce is gaining from an evolution in consumer behaviour as well as advancement in technology. Increasingly, he says, consumers are shopping across multiple devices – desktops, smartphones and tablets – beginning searches on one device and continuing on another and perhaps completing the transaction on a third. In addition, consumers are becoming more comfortable using mobiles for payment for everyday activities, particularly buying coffee. “These repetitive purchases replacing top-up cards with mobile apps not only paves the way for larger transactions, but provides brands more and more information about their customers. This in turn has the potential to enable brands to generate more relevant offers and increase long-term customer value,” Gruber says. “Also, even when they’re not paying with their own mobile devices, increasingly they are using their credit cards with merchants who use Square using a mobile device as a point-of-sale.”

Technology developments

Despite of the fact that NFC “has gone absolutely nowhere”, Gruber points out that growth in mobile payments is happening. “Some argue that Apple’s refusal to integrate NFC has effectively killed it, but NFC is a technology looking for a solution to fulfill. As a payment method it provides virtually no benefit over traditional credit cards which may explain why it has failed. While all the posturing from the Android community is that the Android OS supports NFC, the number of Android devices shipping today that actually do is quite small (only 29 devices according to Google, says Gruber) relative to the millions of devices shipping every month. In fact NFC’s struggling status recently led Google to remove the NFC requirement from Google Wallet.

While NFC may have hit a wall, Gruber says there are new technologies coming in that are really exciting for mobile commerce. One in particular is Apple’s iBeacon which uses Bluetooth LE (low energy) to let retailers sense and communicate (eg. send offers) with compatible devices within 50 metres. So the promise of proximity marketing may finally be realised. Gruber points to estimates from eMarketer to back this up; these are that mobile commerce will generate $42 of the total $263bn of e-commerce sales for the year, an increase of 68% from 2012. 

Apps on the up

Christian Mischler, co-founder and COO of Hong Kong-based HotelQuickly says customer experience, social recommendations and product reviews are major trends that are driving payments via mobile apps. The other major trends, according to Mischler, are:

 ·        Accessibility and localisation
·         Spending a lot of time in front of screens
·         Smartphones are always with us
·         Personalised shopping

Factors hindering growth include:

·         Consumer data privacy and information risks
·         Credit card penetration/trust in mobile credit card transactions/popularity of credit cards
·         Low income consumers cannot afford smartphones which are often needed to complete mobile transactions.

According to Gruber, a major flaw is that many companies offer too many choices. “Choice is the enemy of conversion. The more options you give the less likely the consumer to make a decision, especially on mobile devices when session time is much shorter than on a desktop. Limiting choice is one of the key reasons why HotelTonight has been so successful. It’s much easier to choose from three choices than from the tens if not hundreds on an OTA site,” he says.

Looking forward

As mobile consumerism grows, so too will mobile payments. “Retailers are using location-based offers and deals to target a user via mobile apps. Loyalty programmes on mobile will also fuel mobile commerce. Apple's iBeacon technology is going to have a huge impact by allowing people to pay for purchases from their smartphone, in retail stores. Trust is still an issue for the user and it will take some time for people to warm up to spending money via their mobile phone, especially in smaller towns and cities where NFC readers, Square, and so on are not as common,” says Gruber.

The mobile device has the power to give consumers the information they need when they want it and where they want it. That becomes truly powerful when it’s easy to use. As such, the smartphone is a tool of consumer empowerment and is increasingly important in the purchase process.