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The Green Sheet Online Edition

March 23, 2015 • Issue 15:03:02

Mobile payments: Enabling merchants for today, preparing them for tomorrow

By Michael Gavin

In today's evolving world of payments, it's imperative that industry professionals stay aware of the latest technologies to ensure their customers are armed with the necessary tools for success and well-prepared for the future. Mobile payments are rapidly growing and are expected to eventually become a popular method of payment among consumers. More consumers are purchasing near field communication (NFC)-enabled smartphones, businesses are implementing mobile payment acceptance technology, and competition is becoming fiercer among NFC applications. This article provides an overview of mobile payments today and where they are heading to help you understand how to enable your merchants to stay abreast today and help them to be best positioned to gauge their customers' needs going forward so they can meet them.

Apple Pay a game changer

The adoption of mobile payments among consumers and businesses began slowly, but ever since the launch of Apple Pay in October 2014, there has been a significant increase in the interest in and usage of mobile payments.

According to Chase Bank, 1 million of its customers already have their debit and/or credit cards linked to Apple Pay. Bank of America also stated that 800,000 of its customers activated approximately 1.1 million credit cards via Apple Pay, according to a Feb. 25, 2015, blog post by BGR Media LLC titled "Yet another sign that Apple Pay is the breakthrough mobile payments hit we needed."

Thousands of retail stores, groceries, convenience stores and restaurants have already enabled Apple Pay, and the list of businesses continues to grow. Even JetBlue Airways adopted Apple Pay on limited flights, and it plans to have Apple Pay capability on all flights by June 2015 (see http://www.sitepronews.com/2015/02/10/apple-pay-taking-off-with-jetblue-airways/). This gives travelers the convenience of paying for meals, snacks and beverages via a simple tap of their smartphones while flying. With JetBlue being the first airline to adopt Apple Pay, there is no doubt that other airlines will soon follow.

Out of all of the mobile wallets available, Apple Pay has taken the lead by far. Indeed, in her Jan. 27 article in Bloomberg Business, titled "Apple Sees Mobile-Payment Service Gaining in Challenge to PayPal," Olga Kharif, stated Apple Chief Executive Officer Tim Cook had reported that $2 of every $3 spent using contactless payments across Visa Inc., MasterCard Worldwide and American Express Co. are being made with Apple Pay.

Google, Samsung strong contenders

Although Apple Pay is the leader in the mobile payment space, Google Inc. is making bold moves. It recently purchased Softcard technology, the mobile payments application supported by Verizon Wireless, AT&T Mobility, and T-Mobile Inc. Google developed an agreement with those carriers, through which they will pre-install Google Wallet on all Android smartphones beginning this fall, according to a Feb. 23, 2015, Forbes article by Robert Hof titled "With Softcard Deal, Google Buys A Big Boost For Its Wallet Vs. Apple Pay." When consumers automatically have a mobile wallet installed on their phones, the popularity and usage of mobile payments will grow tremendously.

In addition, Samsung Electronics America Inc. purchased LoopPay, the developer of magnetic secure transmission technology (MST) in February. Rather than replace or alter existing payments equipment, Loop's MST facilitates contactless, mobile payments with existing credit and debit card mag-stripe readers. It does this by converting the readers into contactless receivers of magnetic signals sent wirelessly from mobile devices, such as smartphones, that hold cardholder payment data. In addition, in an apparent effort to overtake Apple in the mobile payment market, Samsung disclosed in early March it will not collect any fees on its MST mobile wallet, Samsung Pay, which is expected to launch in the summer of 2015.

More options, more value in mobile

With mobile payments growing rapidly, it is time for your customers to get onboard. Businesses, including your merchants, need to focus on the consumer experience to provide value to their customers and differentiate themselves from their competition. Consumers want options, flexibility and value, and that's what mobile payments provide. They give consumers the choice of how they would like to pay and even the option to leave their wallet at home. It also gives them speed and convenience, providing them with an easy, quick way to pay.

Your customers also have the ability to integrate a loyalty or rewards program into mobile wallets, which can drive consumer purchases and increase sales. In fact, Apple is releasing Apple Pay 2.0 later in 2015, which will bring coupon redemption and loyalty functionality within Apple Pay itself (see www.pymnts.com/news/2015/coupons-and-mobile-ticketing-part-of-apple-pay-2-0/#.VO4eH_nF_NI).

Offering loyalty programs and coupons enables businesses to learn more about their customers and gain insight into their purchasing habits. They can also use this data to send out targeted offers. Plus, it can assist in identifying key trends to better approximate inventory orders, resulting in cost-savings for your customers.

EMV, an incentive to go mobile

Some of your clients may be reluctant to accept mobile payments. Whether they do not see a need for it or think it is too costly or whatever the reason may be, there is an easy way to overcome their objections. Start the conversation around the mandated migration to EMV (Europay, MasterCard and Visa) chip card technology, and highlight the urgency of upgrading their payment terminals. In October 2015, the liability shift goes into effect; this will have a major impact on them because any merchant could be held liable if a fraudulent transaction were processed on a non-EMV compliant device in one of the merchant's locations.

Having an EMV-ready terminal also has built-in security to protect both merchants' businesses and customers' data. The good news is that many EMV-ready terminals come with NFC capability (as does Apple Pay) already built-in. Leading the conversation with chip cards will help make it a smooth transition where you can highlight the benefits of both EMV and NFC with one upgrade.

Many small and midsize businesses are already reaping the benefits of mobile payments and are prepared for the chip card migration. Don't let your customers lag behind. Help them recognize the benefits of accepting mobile and chip card payments.

end of article

As Cayan's Senior Vice President, Sales, Michael Gavin is responsible for day-to-day management of the company's direct sales efforts including organizational structure, sales forecasts and overall strategies. He also oversees all sales activities within the company's agent channel, a growing network of more than 400 independent representatives throughout the United States. Michael has served as a key leader within the organization since joining the company in late 2000. An individual who has made numerous key contributions, Michael was the architect behind the design and development of the agent channel. Michael is a graduate of Merrimack College where he earned his Bachelor of Arts degree in Political Science. Contact him at mgavin@cayan.com.

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