Mobile payment on the advance

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EuroCIS, Europe’s leading trade fair for retail technology, addresses the topic of mobile payment as one of the trends revolutionising retail processes over the next few years, say experts. According to a study by the Gartner Institute, mobile payment services already accounted for sales worth US$ 235 billion in 2013. By 2017 these figures are expected to triple.

“A current EHI study reveals that 23% of major retail companies have already introduced NFC technology, another 47% are planning its introduction and of these over one third intend to do so by the end of 2014. This underscores retailers’ willingness to create the prerequisites for innovative payment options at the check-out systems,” says Horst Rüter, Head of Research in the Payment Systems Division and member of the EHI Board of Management.

Mobile payment is the technical term for contactless payment, for instance credit cards with NFC functionality (Near Field Communication) or mobile payment by Smartphone with an NFC-enabled App. The technology is not mainstream yet “but on its way to becoming mainstream” says Nils Winkler, CEO at Yapital, Luxembourg. The company is a provider of a cashless cross-channel payment solution that allows shoppers to pay and shop across all channels – both offline, by mobile, online or by invoice. Winkler expects Apple’s decision to integrate a mobile payment solution into the iPhone 6 to speed up developments and create a situation where mobile payment becomes second nature to consumers faster than this would have been the case otherwise. “Things are looking good – not just for Apple but also for the mobile payment sector as a whole.”

A similar view is shared by Telefónica, Munich, a provider of a complete “eco-finance system” (including among others “mpass” for paying with your mobile phone). They feel that apart from the progressive digitalisation of society the unabated Smartphone boom is a key driver for growth in the mobile payment sector. As many as over 90% of Germans aged 16+ already own a Smartphone, they say. “These little all-rounders have become constant companions helping to make life a little easier,” say Telefónica.

Positive impulses for mobile payment also come from other areas. As the number of NFC-enabled Smartphones is growing, the interest of banks and retailers in mobile payment solutions is also rising. Even credit card companies are “improving the infrastructure” for mobile payment by increasing the number of NFC payment terminals. MasterCard announced, for example, that NFC payments via MasterCard/Maestro are scheduled to be available all over Germany by 2018.

Against this background many mobile payment providers now focus on offering retailers and consumers an innovative overall solution with new added value. Their aim is to link the real and the digital worlds. At the EuroCIS trade fair solutions will be presented that fuse mobile payment with mobile advertising: shoppers receive a mobile coupon on their Smartphones sent via short text/picture message. This voucher can then be immediately redeemed at the check-out of the store by simply holding the Smartphone over the NFC-enabled payment terminal. The payment transaction is then carried out via mobile payment processes.

In addition to using mobile payments for loyalty schemes and couponing, retailers’ eagerness to polish up and modernise their modern image is another key driver prompting the use of mobile payment. “We found out that over 70% of Germany’s major retail companies intend to invest in NFC technologies and/or QR code scanners simply to be all geared up for the rising acceptance of contactless and mobile PoS payment solutions and their use in online shops,” reports Markus Hövekamp, CEO of VeriFone, Bad Hersfeld, a supplier of such products as all-round terminals, modern interaction platforms as well as portable solutions.

According to Hövekamp, the current challenge for retailers when equipping their PoS with such solutions is to identify and decide in favour of the technology that is sustainable for several years and therefore justifies the investment.” And this is also why in the eyes of many mobile payment professionals the coming EuroCIS will be of outstanding importance as an information platform.

Rainer Sureth, CEO at Concardis, Eschborn – a supplier of payment solutions for bricks-and-mortar retail, service providers, Internet and mail order operations – is convinced that mobile payment will also play an ever more important role because E-commerce and OTC are increasingly converging. Technology is only of subordinate importance here, he feels: “Everything capable of simplifying the payment process, regardless of whether the solution is based on NFC-chips, QR codes, Bluetooth Low Energy or any other technology, is welcome”.

This company is one of the suppliers wanting to enable sales staff to handle payments anywhere inside a physical store by means of mobile payment solutions. This can be done using a card-based mobile payment solution for the sales assistant’s Smartphone. Such an approach requires comparably low investment while giving staff additional time for assisting and selling. In Sureth’s opinion, this is compelling proof of his thesis that retail has more options than to just wait for one method, one provider or one App for mobile payment to assert itself.

Instead of being reluctant to invest, retailers can also decisively drive mobile payment developments themselves: by using card terminals for Smartphones with comparatively low effort. This allows every retailer, craftsman, market vendor, food service provider, trade show exhibitor or taxi driver to simply accept card payments all of a sudden.

The crucial point here is “an intelligent linking of individual functions such as loyalty, couponing or payment in order to ease check-out through a precisely tailored management,” says Norbert Gödicke, Managing Director of NuBON, Hamburg, and adds “this takes courage and an eagerness to innovate. So retail is called upon to gather information, reflect on existing or planned technical infrastructures and to initiate pilot projects.”

Conclusion: retailers are well advised to remain deeply involved in mobile payment. According to Stefan Krüger at Valuephone (Berlin), there are currently five specific success factors under discussion:

1. Retailers can capitalise on consumers’ mobile lifestyle for increasing their footfall. “Marketing by Smartphone will shortly be the dominating channel.”

2. Provided the right strategy is pursued, mobile payment benefits both retailers and consumers. Direct communication with the customer, in particular, is an innovative form of customer loyalty. The benefits for shoppers are mobile coupons or payback points that are redeemed automatically. Krüger explains: “Mobile payment is faster than paying with cash or EC cards, it is handy and it is hip.”

3. Payment transactions must be processed in the background – safely, transparently and smoothly. The payment system should be engineered in such a way that the consumer‘s account data is saved neither on the mobile phone nor at the retailer’s store or by the service provider.

4. Mobile payment processes must fit in with retailers’ existing processes. The retail data on prices and merchandise quantity is only held by the retailer. Furthermore, there must not be any concealed costs for retailers caused by defaults or risk transfers.

5. Optimum mobile payment systems should have low entrance barriers. This also includes immediate use with the direct debit system as well as intuitive menus for user-friendly operation. “For shoppers mobile payment must be a retail experience rather than simply a method of payment, i.e. it must be embedded in other mobile services.”

The providers of check-out software have long adapted to this swift development. Their IT solutions can be networked ever more often – using interfaces that extend the applications of check-out software to include mobile payment options. Commenting on this Christian Jürs, Head of Sales at Futura Retail Solution (Stelle/Hamburg), says: “Our solution suits mobile payment. It supports all payment models ranging from SEPA-conforming direct debits to payments by Smartphone.”

EuroCIS 2015 will be held in Halls 9 and 10 of the Düsseldorf Exhibition Centre and opens to trade visitors daily from 10.00 am to 6.00 pm from Tuesday, 24 February 2015, to Thursday, 26 February. 1-day tickets cost EUR 22 (EUR 17 when purchased online in advance (e-Ticket)), 2-day tickets are EUR 40 (EUR 30 when purchased online). Students and trainees pay EUR 10. Admission tickets include a free return trip on public transport marked VRR (Verkehrsverbund-Rhein-Ruhr).

Source: EuroCIS