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Expert Column: Are Mobile Wallets Going Mainstream at Retail?


For years, various pundits have predicted that mobile wallets and the ability to pay with the swipe of a smartphone will be the next big thing in retail. And for nearly just as long, these payment options remained largely a novelty, in some cases even seeming to be more trouble than they were worth. Now their time has finally come, as evidenced by heightened consumer response, and as showcased by retailers that have been able to make mobile wallets work properly. The advent of mainstream mobile wallet solutions that consumers actually want to use — and that retailers can actually synchronize with their systems — has finally arrived, with the potential to become more popular than many retailers might be ready to handle.

According to Interactions' recent "Retail Perceptions" trend report, nearly 30 percent of shoppers are using a mobile wallet — that's nearly one-third! — and 62 percent of those who don't say they expect to start using one within the next year, for nearly a whopping two-thirds of your shoppers. Add to that the fact that all of the major credit card networks in the United States participate in at least one mobile wallet solution, and it's clear that this is a real trend that retailers need to leverage and become engaged in.

The biggest players today are mobile solutions that work with multiple banks, multiple forms of payments and/or multiple retailers. The four popular choices are PayPal, Apple Pay, Google Wallet and Softcard. Apple's release of the Apple Watch has the opportunity to provide a big boost for the use of mobile wallets, as the trendy timepiece is equipped with Apple Pay.

It should be noted, however, that as much as consumers may want a mobile wallet option, the market is a bit unsettled without an already ordained single standard mobile solution, and retailers have been at times hesitant to adopt any such mobile solutions, waiting to see how the disparate options ultimately turn out. Notably, the adoption of mobile payment will require sizeable retailer investment in hardware and software, and some retailers abhor the possibility of making the wrong choice of provider. Those retailers are waiting to see which way things will go.

Cracks in the Dam

While the floodgates might not be fully opened yet, there are widening cracks in the dam, with food retailers around the world starting to provide e-payment options for shoppers. In the United States, grocers ranging from Sprouts Farmers Market to Wegmans Food Markets to Whole Foods Market now accept digital wallets. Further afield, in Zimbabwe, for example, wholesale food distributor National Foods is teaming with Econet Wireless to provide shoppers with the ability to purchase groceries from their smartphones, while in Australia, grocery retail giant Coles has launched a mobile wallet app that combines a payment system with the chain's rewards points.

Beyond grocery, Starbucks, an early adopter of mobile payments, has shown the retail industry the sheer potential of what can happen when you enable shoppers to pay with their phones. The coffee chain’s app enables payment at its stores, and although used only at Starbucks, it nonetheless handles an estimated 6 million to 7 million transactions per week, accounting for nearly 16 percent of the company’s total U.S. sales.

For retailers looking to join the mobile payment revolution, it all comes down to knowing your audience. Ask yourself: Will my existing target market use a mobile wallet tied to a credit card? Will it allow me to target new consumers who otherwise might have sought other retailers? Will consumers be willing to use their checking accounts? Is there an existing mobile payment system they already use and like, which could work for me, too?

As with so many of the changes affecting the industry today, retailers must remember that consumers are in the driver's seat. Gathering insights to deliver a solution that clearly takes consumers' needs and preferences into account is the only way to truly succeed and make sure that they head – mobile wallets in tow – into your stores.

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