The future of payments is mobile

As we have seen for some years now, mobile devices play an important role in the early stages of the purchasing process. European consumers, equipped with smartphones, have the possibility to access information simply and immediately.

In this way, the mobile phone is an ally for consumers during the phases of discovering needs and evaluating alternatives. The mobile phone intervenes even when the consumer is in the physical shop to compare with the different options offered by other sellers. Today, this behaviour is deeply anchored in the habits of Europeans, as digital channels are privileged for these early stages in the purchasing process. In 2018, 50% of French consumers searched for information on their mobile phone while in a shop.

Regarding the last stage of the shopping process (payment) mobile is certainly not the preferred channel of European consumers, however many studies predict a significant increase in the coming years. Therefore, the trend in payment management should evolve rapidly.

In most European countries, mobile spending growth is the highest in 2019 compared to other shopping channels.

In Spain, this growth rate reached 53.7% and in France 41.9%.

Let's see why mobile devices will become the preferred channel for European consumers to make online purchases.

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Mobile, a vector for improving the customer experience

Consumers are becoming increasingly demanding in terms of customer experience. Competition is increasing rapidly, so it is very easy to turn to another retailer if the proposed experience is not well thought out to facilitate the act of purchase. Thus, consumer demand for a frictionless digital experience puts pressure on retailers to meet these expectations.

Mobile devices have several advantages that allow retailers to meet consumers' needs.

Firstly, mobile is now an extension of a large part of European consumers, it becomes a privileged contact channel with customers. In addition, mobile meets consumers' expectations to be able to make a purchase anytime, anywhere. This is why retailers should use mobile as a lever to drive their business, to develop customer interactions and to provide an enhanced shopping experience through this channel.

On the other hand, using mobile to make payments allows consumers to be more confident about payment-related data which is stored securely. In case of theft and attempted fraudulent use, no mobile payment can be made without customer authentication. Therefore, the access and use of payment data is more controlled and secure than with a simple physical bank card.

Finally, the fact that mobile optimises the shopping experience for consumers is also beneficial for merchants, as it improves customer satisfaction through greater convenience and immediacy of the act of purchase or subscription. As a result, satisfied customers will be more likely to make further purchases and even recommend the merchant to their acquaintances. Thus, for retailers, it is a virtuous circle that is activated and revenues are maximised with repeat purchases.

Buying a subscription: getting easier with mobile

Today, more and more business sectors are developing subscription offers that appeal to consumers. In recent years, we have witnessed a shift in consumer behaviour that values the access model rather than the ownership model, as was previously the case. It is the quality of service and experience today that attracts consumers and keeps them loyal.

The challenge for retailers in the subscription economy is to facilitate the process with the aim of developing customer acquisition. This step is critical for the merchant and must be the smoothest and fastest to reduce the risk of churn. Here again, mobile devices can play a role in improving the underwriting process. For example, by replacing the tedious step of filling in bank details with phone number information, the customer benefits from a simplified and fast process.

At SlimPay, we are convinced that in the coming years, mobile will become an essential channel for customer relations, but also for payments, whether one-off or recurring.

DSP2, a catalyst for the development of mobile payments

The evolution of European regulation is another reason that predicts the central place that mobile will occupy in the payments world of the future. Indeed, the PSD2 (European Payment Services Directive 2), which is expected to come into force on 14 September 2019, introduces a new rule for Strong Customer Authentication(or SCA) that aims to strengthen payment security and protect consumers' sensitive payment data. To comply with the requirements of DSP2, merchants must implement the SCA for online payments (with some exceptions) to authenticate consumers.

To avoid overburdening the payment or subscription stage, merchants will need to find the best option to authenticate customers. This is where mobile can play a decisive role. This strong authentication performed with a mobile device allows verifying the two factors required by the SCA:

• Possession: the mobile phone possessed by the customer only,

• Inheritance: an element that only characterises the customer, which can be his fingerprint or face with facial recognition.

Europe is the continent where the smartphone penetration rate is the highest in the world at 67.3% in 2018. This is a real advantage for retailers whose market is already accustomed to the different uses of the smartphone. Therefore, retailers will be able to seize this opportunity to introduce new use cases under DSP2.

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To conclude

Consumers have the power to influence real change in the way payments will be made in the future. With expectations in terms of convenience, speed and security, merchants must adapt to take advantage of this opportunity. By proposing a customer experience adapted to these expectations with the use of mobile devices, merchants who are one step ahead will give a new impetus, creating a new relationship with payments: simpler, smoother, more secure.

In China, the development of mobile payment has emerged out of necessity, but its mass adoption is the result of a seamless and frictionless customer experience for users. WeChat Pay and AliPay dominate China and have forever changed the payment ecosystem. This mobile shift has not yet been taken up by Europe. Will we be next?

Sponsored article. Expert contributors are freelance writers from the appvizer editorial staff. Their opinions and positions 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/