The Point

Keys to a Strong Mobile Payment Strategy

Mar  09 
Melissa Santora  Product Strategist, Card Services, Fiserv 

Mobile payments at the point of sale have yet to meet the initial lofty expectations. Blame it on concerns over security or a lack of retailers with mobile capabilities, but, either way, consumers have hesitated before adopting the service. Still, that's not cause for pessimism. Rather, it should send a clear message to financial institutions: Be prepared.

According to the most recent quarterly consumer trends survey, Expectations & Experiences: Household Finances, 60 percent of consumers said they can't leave home without their phones. The only items consumers are more apt to say they can't leave home without are IDs (72 percent) and keys (68 percent). The survey was conducted online by Harris Poll for Fiserv among 3,064 banking consumers in the U.S.

Mobile payments at the point of sale

With their phones in hand, people are only a few steps away from mobile payment adoption.

The key is making sure cards are digitally enabled when consumers want to slot them into a digital wallet. A successful strategy helps make sure a financial institution's card is used wherever, whenever a cardholder wants to purchase and pay, regardless of operating system or device.

It's also important for financial institutions to take a strategic view of mobile payments, beyond the checkout aisle, as a component of their overall mobile strategy. Framed in that context, mobile payments are an outgrowth of mobile banking covering a full range of digital banking products and services as well as tools such as person-to-person payments and mobile bill pay.

The multiple facets of mobile payments, the improving technology behind it and the value people place on their phones are cause for excitement. But widespread adoption won't happen overnight. There are obstacles but also strategies financial institutions can use to work toward long-term mobile payments success.

Obstacle 1: Consumer concerns about security

Consumers, when asked to select the most secure payment method, picked mobile payments least often. They selected cash 46 percent of the time, inserting a card 32 percent, swiping a card 9 percent, paying with a check 6 percent and mobile payments 3 percent. That, though, could have more to do with perception than reality.

Strategy: Educate consumers about the security of mobile payments

Financial institutions have an opportunity to reinforce their role as a trusted partner by showing they can keep people safe within the digital wallet. Security features such as biometrics, cryptography and tokenization form a shield around the mobile payment. And tokenization, in particular, means a lost phone doesn't equate to a lost card. It's simply a matter of deleting the token without reissuing the physical card.

Obstacle 2: There isn't a problem mobile payments are trying to solve right now

When considering mobile payments, a common question is: If my card works just fine, why should I move to mobile? It's a question that requires an innovative answer.

Strategy: Give consumers a reason to use it

Pairing mobile payment use with loyalty and rewards programs gives consumers a reason to adopt the service. Those programs will become even more important as the industry refines mobile wallets and payment functionality. Eventually, it could be all the push people need to embrace mobile payments.

Obstacle 3: Lack of merchant locations accepting mobile payments

Not all merchants accept mobile payments, creating confusion among consumers. On top of that, when people do use their mobile wallets at checkout, they at times encounter glitches.

Strategy: Enable experiences that consumers want today by thinking broader about your mobile banking strategy

At the heart of any mobile payments success is creating experiences that make paying a simple, easy experience people can't live without. Yes, mobile payments at the retail checkout are inconsistent, with competing standards, varying retailer acceptance and consumer demand all playing a role.

However, app-enabled card controls are in high demand because they give people control over the physical cards. They want that control, but they also want access through mobile banking to the same diverse suite of products and services they get through online banking.

Financial institutions can offer consumers those services through the mobile banking app, along with robust P2P and bill pay capabilities that enable people to pay beyond the point of sale. You can meet people where they are today, while serving early adopters in the maturing mobile payments space through foundational steps such as tokenization.

Investing now in a strong overall mobile strategy helps position financial institutions to keep their cards at the top of the digital wallet whenever consumers adopt mobile payments. When they're ready, you will be too.