Mobile-First Payments: Understanding the New Way to Pay

February 2018 study from Pew Research found that 77 percent of Americans now own a smartphone. That’s more than double the amount of smartphones than when Pew first began tracking these numbers in 2011 (it was only 35 percent then). And as more smartphones make their way into the pockets of Americans, it’s more likely that they’ll turn to that device to make payments in their everyday life.

It might sound far-fetched now, but consider what happened in China: Mobile payments have swept rapidly through the country, displacing traditional payment methods like cash and credit. It’s possible to leave your house only with a phone, and pay for food, transportation, or other necessities by scanning QR codes and paying with apps like WeChat or Alipay.

Though mobile payments haven’t reached the same saturation in the US, they’re nevertheless on the rise. A 2017 report by the Mobile Ecosystem Forum said that 78 percent of people have made at least one purchase on a mobile device in the last six months.

“Clearly, the migration from desktop to mobile can only accelerate,” says Christian Von Hammel-Bonton, EVP of Global Product Strategy at Wirecard. “So my message to all businesses around the world is: if you neglect to offer services and products through the mobile channel, you will lose – not only your customers but also your business.”

Making Mobile-First Payments a Priority

This means that developing a plan to implement mobile-first payments is increasingly crucial for merchants. In order to capture business from tech-savvy users, business need to make the structure of mobile-first payments a priority.

An easy way to start making mobile payments a priority is simply to make your business’s website adaptive. This means structuring your site so it will automatically adjust to the screen size of the user browsing it. That means that whether customers are logging on from their PC or their phone, they’ll have the same experience on the site. Or, merchants can go a step further and optimize their site for mobile first. Customers will appreciate an a shopping experience that was designed for mobile users and will be more likely to make a purchase.

Having an good grasp of mobile payment is a must for merchants who hope to focus on mobile first payments. One key aspect of this is understanding how exactly your customers want to pay on mobile. While AliPay and WeChat aren’t as popular for payments outside of China, digital wallets are gaining users and popularity. Digital wallets are simply a tokenization of a user’s data stored digitally. This means that while a digital wallet can include payments (more on that in a moment), it can also include other types of data like boarding passes, room keys, or identification.

Mobile wallets (or the “Pays” — Apple Pay, Google Pay, and Samsung Pay)  are what merchants who are interested in a mobile-first payments experience should be paying attention to. This is the much touted “tap and go” method of mobile payment. This technique uses a smartphone’s built in NFC (Near Field Communication wireless technology) or BLE (Bluetooth Low Energy) a payment is made to the merchant. These mobile wallets offer both convenience and security. Paying with a mobile wallet is a quick experience in a brick-and-mortar store, and is nearly instantaneous when paying online. When considering the pros of investing in mobile-first payments, merchants shouldn’t overlook the benefits to their own business: nearly instantaneous access to funds, access to real-time data, and a competitive edge that comes from giving the customer a fast and secure payment option.

But despite the fact that these mobile wallets do offer heightened security with encryptions similar to chip cards, good old card not present (CNP) transactions are still what most customers are most familiar with. Though e-wallets are burgeoning in popularity, many users will still first turn to the card in their physical wallet to make payments — even if they are making their payments on mobile. Though digital wallets and mobile payments are evolving quickly — and merchants should be keeping an eye on these trends for when (not if) they need to adopt them — to capture the most sales business should offer customers the option to perform CNP transactions on mobile.

The evolution of mobile commerce is perhaps one of the most crucial payment developments  in recent years. Merchants who want to stay ahead of the curve should be looking for ways to start implementing mobile-first payments into their current business model.