News, Education and Events Decoding Digital Payments & Fraud

News, Education and Events Decoding Digital Payments & Fraud

How to Navigate A Rapidly Growing Payments Ecosystem

How to Navigate A Rapidly Growing Payments Ecosystem

By Kristian Gjerding, CEO, CellPoint Mobile

Over the last two decades, the mobile marketplace has evolved exponentially, from those very early days of the simple feature phone (when mobile access to the Internet was still a novelty) to the iPhone’s launch in 2007. Today, the app economy is booming.

Now, nearly 20 percent of Americans routinely use mobile wallets to complete purchases and 12 percent of merchants generate half their revenues via the mobile channel—a figure expected to double within two years.

Starbucks, long considered the mobile payments pioneer, currently collects a significant 21 percent of its revenues from the mobile channel—a figure that could rise to 50 percent in a few years.

For any executive still hesitant about investment in the mobile channel, those statistics should serve as both a warning and wake-up call: mobile is where the future of commerce lies.

What Can Your Business Do Now to Board the Mobile Bandwagon?

The following tactics, culled from my experience in the rapidly growing payments ecosystem and the implementation of comprehensive mobile payment solutions for airlines and other travel-related businesses, can help companies in all industries develop and implement “mobile-first” strategies now so they’re prepared for what’s ahead.

Understand the Benefits

The key payoffs of a “mobile-first” payments strategy include:

  • An increase in revenues from consumers who can buy more products more frequently from their always-connected smartphones and devices with simple, fast and effective payments
  • A better, more personalized and immediate connection to your customers
  • A decrease in operational costs, represented by more self-service capabilities and less reliance on manual processing and reconciliation of payments. Combined, lower operational costs + increased revenues = higher profits and better profit margins

Plan Now, But Be Ready for Constant Change

The payments ecosystem never stands still, shaped as it is by new technologies, ongoing mobile wallet deployments across different regions, and continuous upgrades in devices and operating systems. As such, businesses must pay attention to key challenges, including:

  • Geography & Availability: Major wallet providers roll out their solutions by country and in partnership with regional or global banks. Make sure your strategy is in sync with the country-by-country roll-out plans of such providers as Android Pay, American Express, Samsung Pay, Apple Pay and others.
  • Adoption Differences: Some countries and regions are more prepared and enabled for mobile payments than others, according to the MasterCard Mobile Payments Readiness Index. Internet-connected Singapore and Canada rank highly, for example, as does Kenya, where ubiquitous smartphones now provide payments and banking services to remote and physically underserved markets.
  • Customer Differences & Behaviors: Study the countries and regions where your customers are active, and deliver the mobile wallets they prefer on the devices and operating systems they use most.

Enable and Support Security

Accepting mobile payments is faster than accepting traditional credit and debit cards, because payment data is pre-stored in the device and can be activated by a swipe, touch or scan. But what happens if a customer’s phone is stolen or lost, or if fraudsters attack?

Mobile-channel fraud among large merchants has risen 26-35 percent year over year for a variety of reasons (e.g., numerous channels of entry, cross-border transactions, weak verification processes or the ability to buy from a smartphone and pick up in-store without additional payment verification).

Proper security measures are critical to mitigate the risk of fraud and its related costs, including:

  • Real-time fraud monitoring, based on data profiles and risk-based rules engines that can stop or delay fraudulent transactions as they occur and until they can be verified.
  • Identify verification, including biometric fingerprints, iris scans and facial recognition or voice technologies that can strengthen ID verification.
  • Payment authorization, including step-checks, tokenization and one-time passwords that can build in necessary levels of authorization to ensure the legitimacy of payments

The Importance of Creating a “Customer-Centric” Experience

Revenues are important, but the customer experience is critical. The user experience of any mobile commerce solution, regardless of industry, should be focused on making it as seamless and frictionless for the user as possible, while offering the consumer all the options they need. Mobile payment solutions must:

  • Support omnichannel payments, meaning the ability to service all direct-channel interactions seamlessly without interruption; the ability to begin a transaction on one device (e.g., laptop at home) and complete it on another (e.g., smartphone en route to the store or airport).
  • Make payments easy to use, meaning the ability to pay in as few steps as possible. Do not make customers re-enter the same information several times, or switch from one channel (online, mobile, call-center) to the other as they engage with you. For example, we often integrate one-click purchase capability for our airline customers, eliminating the need to enter or repeat the same data on a small screen.

Put Data to Work in the Mobile Environment

Mobile payment transactions are data-intensive, framed by the need to collect, store, connect and manage massive amounts of data from a variety of touchpoints: consumers, payment technology vendors, and merchants. Databases, for example, must connect, reconcile, verify and process customer name, account number, type of mobile device, operating system, contact information, preferred payment method, language, currency, loyalty program, payment processor information, and internal transaction processes.

Businesses might also need to offer a variety of payment methods or options, depending on their respective customer base and markets – a decision that adds more data to the mix. In this data-rich environment, choose payment vendors wisely, and ensure they are able to support a rapidly changing and constantly evolving payments landscape – securely and cost-effectively.

Bottom line, focus on agility to stay ahead of a payments ecosystem whose only constants these days seem to be constant change, ongoing disruption and a march toward a mobile-first marketplace.

Kristian Gjerding is CEO of CellPoint Mobile, a technology solutions firm that enables mobile payments and digital e-commerce solutions for clients in the airline and travel industry worldwide. CellPoint Mobile’s key solutions encompass payments, mobile wallets and e-commerce orchestration to take advantage of the shift of the market to mobile transactions and payments.

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