The future of payments is mobile

As we have been seeing for several years now, mobile phones play an important role in the early stages of the purchasing process. the European consumer, increasingly equipped with a smartphone, is able to access information easily and immediately.

The mobile phone is therefore a close ally for consumers during the stages of discovering needs and evaluating alternatives. Mobile phones are also used when the consumer is in the shop to compare different alternatives offered by competitors. This is now an integral part of European shopping behaviour as digital channels are preferred for these early stages of the purchasing process.

Regarding the last stage of the purchasing process, payment, mobile phones are certainly not yet the preferred channel for European consumers, but many studies predict that there will be a boom in the coming years.

In most European countries, the mobile spending channel grew more than any other in 2019.

We see why mobile phones will become the preferred channel for European consumers to shop online.

See all software Payment Gateway

Mobile, the means to improve the customer experience

The consumer is increasingly demanding in terms of customer experience. As competition is fierce, it is very easy to turn to another retailer at the first snag encountered. Therefore, the increasing consumer demand for a smooth digital experience puts pressure on merchants to meet these expectations.

Mobile phones offer several advantages that enable merchants to meet consumer demands.

Firstly, as mobile phones are now 'an extension of the arm' of most European consumers, they become a preferred channel of contact with customers. Moreover, mobile phones offer the possibility to shop anywhere, anytime. Therefore, retailers should use them as leverage to grow their business, developing interactions with their customers and offering a better shopping experience through this channel.

On the other hand, the use of mobile phones to make payments gives consumers more peace of mind about the security of storing their payment data. In fact, in case of theft and attempted fraudulent use, it is not possible to make payments with a mobile phone without customer authentication. Thus, access to and use of payment data is more controlled and secure than with a simple credit card.

Finally, the fact that mobile phones optimise the shopping experience is also beneficial for merchants, as it improves customer satisfaction through greater convenience and instantaneousness in the act of purchase and/or subscription. As a result, satisfied customers will be more likely to make new purchases and even advertise positively to their acquaintances. Thus, for merchants, thanks to a virtuous circle that is set in motion, their profit will be increased as a function of these repeat purchases.

Subscribing: it's easier with a mobile phone

Today, more and more business sectors are developing subscription offers that appeal to consumers. Indeed, in recent years, we have seen a shift in consumer behaviour that values the access model more than the ownership model, as was the case in the past. Quality of service and experience are what attracts consumers today and keeps them loyal.

The challenge for merchants in the subscription economy is to facilitate the subscription process to increase customer acquisition. This step is critical for the merchant and must be as smooth and fast as possible to reduce the risk of churn. Again, mobile phones can play a role in improving the subscription process. For example, by replacing the tedious step of entering one's bank details with the use of one's phone number, the customer benefits from a simplified and quick process.

"We at SlimPay are convinced that in the coming years, mobile phones will become an essential channel for customer relations, but also for payments, both single and recurring".

PSD2 a stimulus for the development of mobile payments

Looking at the evolution of European regulations, we have further confirmation that mobile phones will occupy an important place in the payments world of the future. Indeed, PSD2 (Payment Services Directive 2), which comes into force on 14 September 2019, introduces a new standard on Strong Customer Authentication(or SCA), which aims to strengthen the security of payments and protect sensitive consumer payment data. To meet the requirements of PSD2, merchants will have to implement SCA for online payments (subject to exemptions) to authenticate consumers.

To avoid making the payment or subscription process more complicated, merchants will have to find the best option to handle strong customer authentication. This is where the mobile phone can play a decisive role. This strong authentication performed with a mobile phone enables the three factors required by the SCA to be verified:

• ownership: the mobile phone that only the customer possesses
• inherence: an element that only the customer characterises, which can be his fingerprint or his face with facial recognition
• knowledge: something that only the user knows

Europe is the continent in the world with the highest smartphone penetration rate with 67.3% in 2018. This is a real advantage for retailers who have a market already accustomed to the different areas of smartphone use. They will, therefore, be able to take advantage of this opportunity to introduce new usage possibilities under PSD2.

See all software Payment Gateway

In conclusion

Consumers have the real power to influence a change in the way payments will be made in the future. Having to meet expectations in terms of convenience, speed and security, merchants need to adapt to take advantage of this opportunity. By offering a customer experience tailored to their expectations and focusing on mobile, they will be able to make an important input, revolutionising the concept of payment: simpler, smoother, more secure.

In China, the development of mobile payment was born out of a need, but its massive adoption is the result of a frictionless payment experience for users. WeChat Pay and AliPay are the dominant players in China and have changed the rules of the game in terms of payments. In Europe, we cannot yet fully talk about a mobile transition. Will we be next?

Sponsored Article:The authors are independent experts who are not part of the appvizer team. Opinions and views are personal

Sources:

https://www.pwc.de/de/digitale-transformation/pwc-studie-mobile-payment-2019.pdf
https://comarketing-news.fr/le-parcours-dachat-a-lere-de-lomnicanal/
https://www.retailmenot.fr/infographie-e-commerce-m-commerce-en-europe/
https://labo.societenumerique.gouv.fr/wp-content/uploads/2018/12/barometredunumerique2018.pdf
https://www.statista.com/statistics/203722/smartphone-penetration-per-capita-in-western-europe-since-2000/