Ninety percent of U.S. consumers own a mobile device 1 and the widespread adoption mobile phones, smartphones, and tablets is opening the floodgates for innovation in the mobile marketplace. One of the most lucrative areas of growth is mobile payments. The annual transaction value of online, mobile, and contactless payments is set to reach more than $2.5 trillion in 2014, with a five-year projection nearly doubling it to $4.7 trillion.2
As a result of this projected growth, both new and existing companies are jockeying for position in the payment value chain by delivering mobile payments solutions that are increasingly demanded by consumers. Mobile payments is attractive as an innovation play-ground for companies focused on using mobile devices to complete online transactions and bring the digital wallet to the offline world.
Payments innovations is a major focus area for Discover. The well-known financial institution is uniquely positioned to leverage its asset base and infrastructure to proactively create and add value for all constituents in the mobile payments ecosystem. Discover has proactively responded to the disruption in the landscape by working to achieve industry ubiquity and clarity from all points in the payments value chain by holistically addressing transaction processing, establishing standards, and, most importantly, ensuring security. This approach has allowed Discover to enable a broad spectrum of commerce offerings using multiple form factors, positioning its partners to seize opportunities in mobile commerce however the market evolves.
But just how much is the emerging landscape evolving? Consumers want to adopt mobile payments. From an in-store customer transactional experience, 71 percent of shoppers are interested in paying by mobile phone but only 9 percent of retailers have mobile wallet capabilities.3 This disconnect between consumer desires for mobile payments and their ability to do so at the point of sale indicates an opportunity for payments providers to close that gap.
That’s not to say retailers aren’t taking notes and focusing on the point-of-sale experience. Many retailers are setting their sights on mobile innovations and less on online shopping. Forty percent of retailers ranked improving the in-store shopping experience as important, whereas only 16 percent said the same of online shopping.4
Many well-known retailers during the last few years have made good on their commitment to improving the in-store shopping experience by equipping employees with mobile point-of-sale devices which allow customers to check out anywhere in the store. Some major retailers report that 15 percent of U.S.-based in-store transactions come from mobile payments.5
And it’s not just payment transactions that are changing, but also how merchants and financial service organizations interact with customers during their purchasing experience. The rise of emerging payments has led to more marketing opportunities for retailers to engage customers while shopping such as through a mobile coupon alert that is sent via text message while the customer is in the store.
There’s plenty of conjecture on what the customer experience of the future will look like, but it’s almost certain that it will involve some type of mobile device, whether a smartphone, tablet, or even a wearable device such as a smartwatch.
New entrants are finding ways to leverage mobile devices to directly interact with customers. The organizations that will remain relevant in a mobile world will be those that can create a relationship with their customers no matter how the customer chooses to interact with them. With change occurring so quickly, these organizations must be nimble and flexible and open to innovative business models that can provide value for all players in the mobile commerce ecosystem, such as Discover.