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The Green Sheet Online Edition

February 10, 2014 • Issue 14:02:01

Why mobile payment systems fail

By Ralph Dangelmaier

Editor's Note: This article was first published Jan. 17, 2014, by Retail Merchandiser. Reprinted with permission. Copyright 2014 by Ralph Dangelmaier. All rights reserved.

Everywhere you look, mobile commerce's star is rising. According to a recent Deloitte survey, for example, 68 percent of smartphone owners planned to use their devices for holiday shopping in 2013. According to an eMarketer forecast, mobile devices will drive more than $41 billion, or 16 percent of retail e-commerce sales, this year – up from 7 percent two years ago. By 2017, eMarketer expects m-commerce sales to reach $113 billion.

But those sunny prognostications ignore a giant fly in the ointment: the abandonment of mobile shopping carts. A recent Harris Interactive survey found that two out of three consumers who tried to make purchases on their smartphone or tablet stopped short because of snags during the checkout process.

Other reports found mobile shopping cart abandonment rates exceeding 90 percent – some 20 points higher than on larger devices. Explanations range from hard-to-navigate mobile carts and mobile sites that aren't optimized to fit the smaller mobile form factor, to problems such as high shipping costs, long delivery times and "window shopping" behaviors that put a damper on mobile and nonmobile commerce alike.

One factor many merchants and analysts miss, however, is the role of the mobile payment system itself. Most mobile payment platforms require too many steps to checkout, lack flexible payment models, have limited ability to offer promotional features like couponing, and ignore the realities of selling in a global economy.

With the shift toward smartphones and tablets as the computing devices of choice – illustrated by recent IDC predictions that desktops and laptops will account for only 13 percent of the worldwide smart connected device market by 2017 – merchants are bound to lose billions in mobile shopping dollars until these gaps are closed. Many of the missing pieces are routinely included in online payment systems but are MIA in mobile editions.

Among the deficiencies are:

1. One-click checkout

One-click purchasing may be standard for returning shoppers making purchases on their desktops or laptops, but it's still the exception in the m-commerce world – despite the fact that repeatedly entering credit card information and other personal data on small screens can be a bigger turnoff to shoppers than having to do it on a full-size keyboard. A few months ago, Facebook announced it was testing one-click checkout for partners' mobile apps. While Facebook said partners will still be able to work with the payment processors of their choice, the announcement demonstrates the priority key industry players are placing on simplifying mobile checkout.

2. Flexible subscription management

From Netflix and newspapers to pet food, shoe and children's product companies, e-merchants are embracing online subscription models, yet m-commerce sites can process only the most basic subscriptions, if at all.

Mobile payment systems should be able to offer multiple plan types (e.g. pay per use, trial with standard subscription, initial charge followed by subscription), any payment cycle (e.g. daily, weekly, monthly and other permutations) and custom options (e.g. upgrades, grace periods, maximum charge limits). Systems should also support any payment method as a subscription option, including wire and bank transfers, purchase orders and e-checks.

3. Promotional tools

Online offers are an essential part of an e-marketer's bag of tricks, but most mobile sites are handicapped when it comes to dynamically generating deals to drive sales, increase order value and/or reduce customer churn. Mobile payment systems need to serve up coupons, up-sells, cross-sells, free trials, product bundles, subscription update reminders and other marketing offers on the fly, based on whatever the shopper placed in his or her shopping cart. Such incentives can help prevent shoppers from exiting mobile carts before hitting the checkout button.

4. Global shopping support

A shopper in France seeking to download an e-book doesn't want to see checkout pages in English or cart calculations in dollars. Mobile payment systems need to display localized content, currencies and payment methods based on the shopper's location – from multicountry methods like WebMoney, CashU and Skrill to Alipay in China, Giropay in Germany and Boleto Bancario in Brazil.

Ultimately, it's all about the buying experience. Mobile stores must adapt to mobile platforms, as well as offer fast, full-featured, marketing-savvy shopping carts. When that happens, fewer carts will be left holding the (shopping) bag – and the m-commerce juggernaut will gain even more speed than the pundits are predicting today. end of article

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