CNP Expo: What’s Really Driving Mobile Payments?

May 20, 2014

CNP Expo: What’s Really Driving Mobile Payments? Starbucks and Chipotle lead the way in getting consumers to use mobile apps by offering special uses, not just trying to replace the credit card. Half of all mobile payments in the U.S. are made by Starbucks customers, who keep track of purchases on their phones and earn rewards. Chipotle customers use phones to order ahead and save time at the busy restaurants.

Competition can drive merchants to develop a mobile app, said Al Bugbee, a fuel retailer whose competitor offered ten cents off a gallon of gas for using a mobile app, which he had to match. Fear also will drive competitors to offer a mobile app, added Doug Rodewald of W. Capra.

“It’s a response to competitors and fear they are going to miss the tipping point,” Rodewald said.

The huge circulation of smartphones will help drive their use as purchasing devices, said Jason Oxman, CEO of the Electronics Transaction Association, a national industry group. There are 5 million more mobile devices than people in the U.S., he said. But, since the Target data breach and subsequent firing of company leaders, concerns have changed in the industry focus.

“Most of the dialog we’ve had this year has been about security,” said Rodewald.

Google developed its mobile wallet several years ago, but the adoption of the technology has been slow. Companies that offer mobile apps must appeal to convenience, value and trust, Bugbee said.

“We are all cautious about what we do with our card data today,” he added.