What Mobile Payments Mean For Marketers

The number of mobile-first shoppers is increasing, putting mobile payments centre-stage. But what else do mobile wallets and the mobile transaction experience offer marketers?

Marketing around the transaction experience has moved centre-stage for retailers with new innovations and further expansion of mobile wallets and mobile payments. What does it mean for marketers?

Mobile payments are set to grow in the coming year, as the number of mobile-first shoppers increases.

In the UK, for example, Christmas trading was a milestone for mobile shopping. Between November and January, more than half of online shopping (51%) was done from a smartphone or tablet rather than a desktop or laptop, according to the IMRG Capgemini Quarterly Benchmarking report. Breaking this down further, the report found that 18% of online sales were made through a smartphone.

“Over the past year [smartphones have] become a major component of the checkout process,” said IMRG chief information officer Tina Spooner. “In January, sales via smartphones grew 95.6% year-on-year, over seven times the rate of those via tablets.”

There is a similar pattern of consumption emerging elsewhere. According to data from Adobe Digital Index, some 17% of online sales during the 2015 holiday season were made from a smartphone.

Many retailers are also recording much higher levels of mobile sales. Andy Harding, chief customer officer at UK department store group House of Fraser said: “Mobile has been clearly identified as a priority area for [us], with over 40% of online sales.”

Driving A Better Shopping Experience

As mobile shopping itself gathers momentum, there remains a gap between browsing and buying behaviours. Two-thirds (66%) of visits to retailer websites came via mobile, according to IMRG Capgemini, compared to the 51% of transactions.

The larger screen sizes featured on the latest crop of smartphones are narrowing this gap. The rollout of third-party mobile wallets, such as Apple Pay, which can be accepted for payments in-app, on mobile-optimised sites and in physical stores, should also help.

Such developments give mobile wallets an increasingly important role in customer experience strategies. As Forrester analyst Thomas Husson writes: “Mobile wallets are not just about mobile payments. Consumers want a better shopping experience.”

Worldwide Rollout

Most of the noise around mobile wallets is generated by the so-called “Pays”, developers of the third-party wallets being rolled out worldwide.

Apple Pay is now available in five markets since it was introduced in the U.S. in 2014. Last year it arrived in Canada, Australia, and the U.K., where retail heavyweights adopting the technology including M&S, Waitrose and Boots. This year it launched in China in February, and roll-outs in Spain, Singapore, and Hong Kong are planned.

Last summer Samsung Pay launched in South Korea and the U.S. (where it’s the market leader), and it will be rolled out to Australia, Brazil, Spain, and Singapore this year following its recent China launch.

Google’s Android Pay, meanwhile, will expand beyond the U.S. for the first time when it arrives in the U.K. later this year.

All these technologies allow consumers to make in-app or tap-to-pay purchases on mobile devices, working with existing contactless terminals in retail stores via near-field communication technology.

They also offer new marketing opportunities for brands. In China, where mobile wallets are more established, leader Alipay allows brands to reach consumers through banner ads; an indication that those available in Europe will likely become more sophisticated in future.

Mobile Wallet As Marketing Platform

Media agency ZenithOptimedia suggests marketers should start preparing for greater platform opportunities on mobile wallets now. In its 2016 trends report “Empowering the Mobile Consumer”, it says brands need to “identify which mobile wallet system(s) to work with” by finding out which are most used by their target audience, and “identify what other services your brand could offer through the mobile wallet, ranging from loyalty programmes, to adjacent services like travel and m-commerce.” Now is the time to “test mobile wallet campaigns and to prepare contextually relevant offerings to engage consumers on mobile wallet apps.”

Creating A Branded Payments Experience

Mobile payment innovations are not solely the domain of tech giants, however, as larger retailers seek greater control over their customers’ mobile payments. By launching their own retailer-branded wallets that serve as integrated marketing platforms, U.S. retailers such as Walmart and Target are creating new communications opportunities for themselves around loyalty and customer experience.

In December, Walmart introduced its Walmart Pay payment solution, which allows Apple and Android users to tap to pay with their smartphones when shopping in stores or online. Customers can link any major credit, debit or pre-paid cards to their account, as well as the Walmart gift card.

At launch, Neil Ashe, president and CEO of Walmart Global Ecommerce, said: “The Walmart app was built to make shopping faster and easier. Walmart Pay is the latest example of how we are transforming the shopping experience by seamlessly connecting online, mobile and stores for the 140 million customers who shop with us weekly.”

Scale and a move to keep customers within the branded experience rather than seeing them shift to a third-party provider to transact are also believed to play a role in the company’s decision to develop its own payments solution. The retailer has around 22 million active monthly users for its app, compared to the around 5 million users of Samsung Pay in the U.S., and the estimated 12 million and 5 million of Apple Pay and Android Pay respectively.

Walmart does not yet support any third-party mobile wallets, but it’s keeping its options open and has developed its own app so that it can be integrated with other wallets in the future.

U.K. retailer Sainsbury’s is understood to be trialling similar features to Walmart Pay to improve the in-store mobile payment experience in its stores.

Adding Value Through Mobile Payments

Starbucks has also created its own mobile payment solution through its Mobile Order & Pay app, available in the U.S. and launched in the U.K. last September. The app allows customers to pre-order and pre-pay for coffee through a smartphone, and not have to queue when they arrive to pick up the order.

The app has been a runaway success. Mobile payments now account for more than a fifth of Starbucks’ monthly sales in the U.S. According to the company, 1 million customers used mobile ordering in December, clocking up 6 million orders between them, indicating a high level of repeat purchase and loyalty.

Transactions are automatically linked to the loyalty program, My Starbucks’ Rewards, allowing customers to keep all their interactions with Starbucks in one place.

This ease of use, and the creation by Starbucks of a branded mobile experience that is not fully immersive but a small convenience moment, is turning customers who may have purchased just once or twice a week into daily customers, and making them think twice about going to other coffee shops.

Positioning the convenience of mobile payments as a value-add, rather than simply another way to pay, has helped the brand drive adoption of mobile payments and create a fuller brand experience. This in turn raises questions for marketers around how they can now turn payments into a relevant brand experience.