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Table of Contents

Lead Story

Fraud, data breach concerns drive EMV support

News

Industry Update

Visa, MC allow merchant surcharging

CAPP provides FI security snapshot

ETA promotes Debit AID to assist EMV

NFC Forum SIGs map tech future

Square wins with Verizon, Angie's List

Federal court ruling may impact CFPB

Features

International charity with roots at home

Acquiring Kilimanjaro, an ISO adventure

Mobile marketing and remote mobile payments transform holiday shopping in 2012

Stephen Kiene
First Annapolis Consulting

Research Rundown

Meet The Expert: Biff Matthews

Selling Prepaid

Prepaid in Brief

Plastic Jungle pilots retail gift card exchange

Researcher makes argument against prepaid regulation

Views

Surveying the financial landscape in 2013

Brandes Elitch
CrossCheck Inc.

Education

Street SmartsSM:
Lessons from that first call

Jeff Fortney
Clearent LLC

Confidentiality: A refresher on ISO, MLS obligations

Adam Atlas
Attorney at Law

Sustaining the mPOS (r)evolution

Venkat Kalyanaraman and Sunil Rongala
MRL Posnet Private Ltd.

Small businesses need big data, too

Rick Berry
ABC Mobile Pay Inc.

Company Profile

Super G Funding LLC

New Products

Interactive multilane checkout

iSC Touch 480
Company: Ingenico Inc.

Advanced breach protection

Voltage Secure Stateless Tokenization
Voltage Security Inc.

Inspiration

Take one invigorating step

Departments

GS 10 Years Ago

Readers Speak

2013 events calendar

Resource Guide

Datebook

A Bigger Thing

The Green Sheet Online Edition

February 11, 2013  •  Issue 13:02:01

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Mobile marketing and remote mobile payments transform holiday shopping in 2012

By Stephen Kiene

Editor's Note: This article was first published in the December 2012 edition of First Annapolis Consulting's Navigator. Reprinted with permission; all rights reserved; 2012 First Annapolis.

Early market data from the 2012 holiday shopping season confirms a well-known trend: mobile is becoming a major factor in the evolution of retail channels, particularly e-commerce. The 2012 Thanksgiving weekend set multiple records for mobile traffic and transaction volume as consumers continue to migrate to smart phones and tablets to complete holiday purchases.

IBM's annual nationwide analysis of online holiday shopping showed that 16.3 percent of all e-commerce sales on Black Friday were carried out on a mobile device this year, with a similarly impressive 12.9 percent figure for Cyber Monday.

Both rates represent increases of over 60 percent compared to 2011, and they still do not take into account the emerging influence of mobile marketing and promotions at the POS. Although a mobile tipping point may not have arrived quite yet, a large-scale transition is clearly underway. It is becoming increasingly clear that an informed and targeted mobile strategy is now a "need to have" instead of a "nice to have" for most merchants.

Devising a multichannel approach

One of the major hurdles for all players in the mobile commerce environment is designing a unique and compelling multichannel approach that is seamless and intuitive for customers as they switch between online, mobile and in-person transactions.

Product comparison and purchasing now occurs at new times, places and devices as consumers are no longer tethered to a desktop or laptop computer, and consumer activity in the mobile channel is less likely to be concentrated on traditional heavy shopping days.

As a sign of consumers exerting this new independence, eBay announced this month that three consecutive Sundays (Nov. 25, and Dec. 2 and 9) each broke its company record for daily mobile shopping volume, twice breaking a record set only a week earlier.

Mobile shopping, much like the online experience a decade ago, is in the early stages of development, but as smart phone and tablet adoption continues to grow, merchants are slowly finding new ways to effectively target and motivate customers differently in each channel, including experimenting with mobile coupons and promotions to target cell phone users wherever and whenever they shop.

From a mobile marketing perspective, most retailer efforts remain limited to text notifications or app alerts for short-term deals and sales such as their "one day only" holiday promotions. These alerts and discount codes are a natural extension of the promotional emails that these merchants have been sending out for years, and more than half of the top 100 U.S. retailers enable mobile redemption of discount codes during checkout.

A few retailers are already using more advanced mobile technology to directly facilitate special in-store or online offers for customers. Sears, for example, is trialing a unique "Wave2Save" kiosk in stores that transmits special savings codes to app-enabled phones, while Target remains an early innovator in delivering bar code-based mobile coupons that can be scanned at the POS.

Some of the nation's largest retailers are also using mobile applications to help customers bridge the gap between in-store and online shopping. Wal-Mart and Target are among several chains that have added bar code scanning features to let consumers compare prices and add products to an online list for later purchase.

The ongoing promotion of integrated mobile functionality will continue to drive growth in remote mobile payments carried out via smart phone applications and the mobile web.

The burdensome process of traditional online checkout on smaller mobile devices was typically seen as a key hindrance to wider adoption of mobile retail payments. Over the last two years, however, digital wallet providers have been pushing their online partners to extend streamlined checkout buttons onto mobile-optimized websites as payment processors jockey to take advantage of the expanding remote payments channel.

Creating brand awareness

PayPal has been effective at translating its brand awareness for online transactions into an early lead in remote mobile payments via the mobile web. The company's mobile Express Checkout feature (launched in 2010) uses a consumer's PayPal login information to transfer stored payment and shipping details directly to the retailer.

In July 2012, the company announced that it expects to process $10 billion of mobile payment volume in 2012, up from a previous projection of $7 billion announced only three months earlier and up from a total of $4 billion processed in all of 2011. Although market sizing estimates for U.S. mobile payments volume vary widely, PayPal could process close to half of all mobile retail payments in the U.S. in 2012, if not more.

Other digital wallet competitors such as V.me by Visa (launched in 2012) and Google Wallet (which integrated Google Checkout in 2011) are only beginning to enable the remote mobile channel. Six of Visa's two dozen V.me merchant partners offer the checkout function on their mobile-optimized websites, and in November, the company announced over 50 issuer partnerships as they seek to boost customer awareness of the new digital service.

Meanwhile, Google is trying to cross-promote its checkout functionality alongside its similarly branded NFC mobile wallet, but merchant adoption is limited. Both of these services trail PayPal in mobile acceptance, even on sites such as Buy.com, which partners with all three but enables only PayPal on its mobile-optimized site. (Figure 2)

Figure 2

As smart phones surpass 50 percent of the U.S. mobile phone market and tablets gain popularity, mobile payments will play an important role in the evolution of the retail marketplace. The growth of POS mobile wallets will only increase the multichannel integration needed to simultaneously facilitate customer transactions in the online, in-store and remote mobile channels.

The race for mobile wallet branding, processing and marketing is already underway, and as this holiday shopping season clearly demonstrates, customers are quickly becoming comfortable using mobile payments technology in new and innovative ways.

Notice to readers: These are archived articles. Contact names or information may be out of date. We regret any inconvenience.

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Spotlight Innovators:

North American Bancard | USAePay | Super G Capital LLC | Humboldt Merchant Services | Impact Paysystems | Electronic Merchant Systems