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Mobile payments – Handsets vs. hand-held terminals / Simon Pont, ECR Retail Systems

Simon Pont, CEO, ECR Retail Systems writes … For many consumers, the notion of paying for something via their phone is still an alien concept. The technology may be developing fast, but usage remains low.

Security and simplicity are key to persuading the masses mobile matters. Consumers need to be convinced that the technology is easy and safe to use, relevant to their needs and will enhance their shopping experience.

While recent developments like Sainsbury’s Scan and Go are designed to help more shoppers get used to using their phone to pay in-store, this shouldn’t be considered a framework for all retailers. It may work for supermarkets, which are more focussed on product quality and price, but for non-food retailers, customer service is still crucial to business success. So claiming mobile technology is ‘shopper friendly’ depends on the specific needs of the shopper. But even then, the way the mobile solution is deployed and the level of functionality it has differs greatly.

There are already a number of units on offer that can process a payment on a Smartphone or mobile device, from Barclaycard’s contactless payment to the likes of iZettle, Weve, ‘Square’, mPowa and other Bluetooth devices, so there is clearly an appetite for this technology. Yet while mobile payments do offer retailers the ability to better service to their customers – reduced queue times, faster transactions and added convenience – it’s a device more suitable to small retailers and business than it is big business. The capability to invest in the technology on such a large scale currently doesn’t exist. Technology providers are still very much in the process of format testing. Until the major banks and telcos show strong investment, that won’t change, and even then, they’ll need customer support to see any sizeable return.

The UK Customer Satisfaction Index (January 2012) highlighted that there is a strong correlation between customer satisfaction and sales (with a score of .63 on the CSI). Better customer service drives sales and market share. Mobile solutions remove the need for face-to-face service and with it customer satisfaction levels. The importance of customer service therefore cannot be ignored. So you have to ask: why would a solution that reduces the level of service be attractive to retailers in the long term?

Visa and Mastercard payments

For customers wanting to purchase their groceries or the latest fashions there is still a strong association with Chip and PIN and the need for a receipt, so Visa and Mastercard payments will remain a method of payment for the foreseeable future and probably won’t change within the next five years. Mobile payments will undoubtedly increase, but it will be some time before we see widespread penetration.

The SME market is a little different. The success of those businesses can be made or broken by the quality of service their customers receive. For mobile businesses like your plumber, electrician or door-to-door salesperson, mobile payments are incredibly valuable. But mobile phone payments are just one option. The ECR XPDA is another; it’s still mobile, but it is one small device equipped with a built-in scanner, printer and on-board Chip and PIN pad.

So why is hand-held terminal payment better than mobile phone payment?

Well, it comes back to delivering highly positive and engaging customer service and an enriching customer experience. Mobile phone payments are fast and easy to process, but there are concerns over security and the legitimacy of payments. Apple may have perfected the paperless receipt to great success, but its customers are not representative of traditional consumers. The majority of customers still like receiving that printed receipt, especially when they are dealing with a sole trader or small business, because it provides them with security and helps legitimise the transaction process. You’re instantly given a printed record that the transaction has been processed successfully. The business can get an instant live update of the sales that are being processed and evaluate those transactions against their levels of stock.

Retailers and ticketing businesses find this data invaluable for tracking customer behaviour and product interest in addition to staff performance. The data can be mapped, tracked and analysed in real-time, helping firms operate in a far smarter fashion than they would have otherwise been able to previously. With customers becoming more demanding this is incredibly important, and as this data is being collected customers are simultaneously receiving a far better service.

Ultimately it comes down to customer taste and the types of transactions you are making. However, while the way we buy goods and process transactions is evolving inexorably towards mobile, it’s important to define what we mean by that term.

Mobile phone payments undeniably have their merits, but they do cater to a specific, niche set of transactions. I believe the future of mobile payments is in actual fact a combination of mobile phones and mobile terminals, which can process transactions both on- and offline (where mobile phone signals are unavailable), legitimise payments instantly with a printed receipt and be deployed across the store to help with queue busting. During seasonal periods, speed and quality of service is vital to maintaining a positive brand image and strong, sustainable customer relationships.

Retailers and small businesses alike need to evaluate the requirements of their customers against their needs as a business, and respond by investing in and deploying a solution which gives a win-win for both parties.

Simon Pont, CEO, ECR Retail Systems


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