Traditional payment methods--credit and debit cards and cash--have
well-established infrastructures and risk models attached to them. If
you want your transaction to be quick (and in some cases hard to trace),
you pay in cash. Even though you're paying with what is essentially
worthless paper, the paper gets its value from the Federal Reserve and
the strength of the U.S. economy.
If you're buying something
online and are worried about fraud, then you pay with a credit card. If
anything goes wrong, the credit card provider steps in, and assuming you
reported the problem in a timely fashion, you're only liable for $50.
"If
the payment mechanism, mobile- or Web-funded, such as a pre-paid gift
card, accepts any of the major credit cards, the same protections exist
for the consumer," says Dan Dufault, executive vice president, Sales and
Marketing at Merchant Warehouse, a provider of credit card processing
and mobile payment solutions.
What if the m-payment, though,
shows up on a cellular phone bill instead of a credit card bill?
Dufault, for one, doesn't believe this will happen. "[Ultimately], the
charges will appear on the credit card associated with that account and,
as such, the same credit card protections will apply."
Dufault's
point of view is probably the safe bet, but it's not a sure thing.
Mcommerce doesn't necessarily have to evolve so that traditional card
networks are in the middle of everything.
"Competing initiatives
and objectives between emerging payment players (such as Google, Square
and PayPal) and traditional constituents (banks, card networks and
merchants) has slowed down advancement of mobile transactions,"
Signorini says. "Much posturing and saber-rattling is occurring, since
much is at stake financially for all of these different market players."
According
to Signorini, it's not just obvious players, like carriers, who could
infringe on the turf of banks and credit card companies, but also major
online companies and retailers as well. "Large merchants, such as
Wal-Mart, 7-Eleven, and Target, have formed their own initiative
(Merchant Exchange), in an effort to at least influence how the market
evolves and ensure that their market heft is recognized by these other
players," Signorini says.
The other thing that Square, PayPal and
Google Wallet could do is drive down the processing fees that merchants
pay. But that doesn't mean they'll end up making any money doing so.
"The
processing of payments is a loss for Google Wallet. The company has
said that they are not interested in becoming a bank," Dufault said.
"Rather, Wallet is a great conduit for information and provides Google
with a way to better deliver their ads to consumers."
Which
points to the main theme often heard in mcommerce cirlces: In order to
succeed, mcommerce should focus not on transactions, per se, but on
customer engagement.
The Secret Sauce of the Mobile Channel: EngagementTry
this some afternoon. Walk in to a Best Buy store, scrutinize some
high-ticket item, such as a gigantic flat-screen TV, and then see what
the nearby sales associates do. Chances are their already surly
attitudes will become more so.
Why? Because Best Buy--and, to be
fair, many retailers--are worried about something they call
"showrooming," or consumers using their stores as a showroom floors to
investigate products and then walking right back out to find a better
price online.
Personally, I find this to phenomena to stem more
from paranoia than anything. I mean, if I'm going to buy online anyway,
why on earth would I subject myself to the torture of entering a Big Box
store? If I don't like what arrives in the mail, I'll ship it back (on
Amazon's dime) and try again. If I do enter a Big Box store, the only
way I can justify the psychic pain is by walking out with some gadget I
must absolutely have right this minute.
According to Andrew
Schrage, co-founder of Money Crashers, a personal finance Website,
Amazon continues to outperform mcommerce (and most Big Box stores)
partially because it has done a better job of engaging customers.
Whereas most mcommerce retailers are overly focused on price and rely
too much on display ads, which typically aren't very user-friendly,
Amazon offers up recommendations specific to you.
"Setting an
affordable price is not the sole factor to drive sales and increase
revenues--providing a more streamlined experience for the consumer is
equally important. Businesses that can do this will be the ones at the
forefront to overtake Amazon and other Web-based retailers," Schrage
says.
Now, I should pause here to point out that not every Big
Box retailer is succumbing to showrooming fears. Lowe's, for instance,
is bullish on mobile.
"Lowe's built its mobile success from the
inside out," says ForeSee's Feinberg. "They started using mobile devices
to help sales associates become more knowledgeable, and they then moved
forward to use mobile apps to make their customers more knowledgeable
too."
In other words, the mobile channel can serve as an
extension of the physical location. Perhaps, people do research first on
their mobile phone, or they do research in the store itself, but if you
engage customers while they are on their mobile devices, instead of
ignoring or discouraging them, they will indeed be your customers and
not someone else's.
"[At Lowe's] when someone without a lot of
home improvement experience walks into the store, they feel like they're
on equal footing with the sales staff," Feinberg says. "This is why
Best Buy will continue to fail. Instead of worrying about showrooming,
they should worry about the customer experience."
