Despite a somewhat slow uptake in mobile payments over the years, the revolution is now quickly approaching, especially due to key enhancements and adoption by both consumers and vendors. Business Insider predicts mobile payments to increase to over $500 billion by 2020, illustrating the need for financial institutions to be on board for the coming wave. Consumers and business will both find new benefits as technology continues to improve, and this improvement and increased adoption will have an exponential effect, with one enhancing the other.
One of the biggest consumer benefits of mobile payments is the potential for faster checkout. Once contactless payments systems are set up, a relatively simple process pioneered by systems such as Apple Pay, consumers can enjoy a quick checkout process, which is driving adoption.
Perhaps more importantly, special offers are becoming an increasingly influential component of mobile payment adoption. This element was originally missing from the equation, leading to a plateau in adoption, with consumers left with minimal benefits in comparison to more traditional methods of payment, like credit/debit cards. Now, with the combination of consumer purchase history and in-store data, special, real-time offers near the point of purchase offer a major competitive advantage to encourage consumers to synchronize their smartphone activities, like shopping for deals, with their purchase method. Loyalty programs, personalized shopping experiences, and informational material linked to a mobile payment all offer huge potential moving forward.
Additionally, an increasingly tech-familiar consumer base, with Millennials becoming the increasingly dominant consumer group and the introduction of Gen Z as consumers, will continue to drive mobile payment adoption.
Small Business Benefits
Similarly to consumers, a fast checkout is an important aspect for businesses. One of the most powerful ways mobile payments enable this is through online purchases, allowing consumers to automatically load their information, and helping businesses overcome any online purchase barriers related to information errors or hesitation during the checkout process.
Mobile payment technology has been improving over time, particularly in terms of its ability to aggregate payments from diverse sources, like online and in-person, and is working to provide business owners with useful data and statistics about sales. Mobile payment providers are hoping sophisticated analytics, along with future opportunities like increased capacity for cashier-less checkouts, will continue to drive mobile payment adoption by businesses.
Implications for Financial Institutions
Mobile payments are officially set to take off, and financial institutions may be wise to encourage early adoption of their own mobile payments systems. Keeping up with mobile payment trends and giving consumers an enticing option to keep their mobile payment platform with their financial institution will give these financial institution early learnings and the opportunity to improve their platforms as mobile payments move into the mainstream. Most importantly, financial institutions who plan now can stay ahead of the curve with the inevitable future of mobile payments, expanding their business into this new technology and increasing knowledge of their customers through the use of built-in analytics related to their mobile platform. The future of mobile payments is coming quickly, and now is the time to learn, improve and plant seeds of adoption.