Mobile can make in-store payments easier and add dimensions to marketing, but consumers will drive the shopping experience, placing unprepared merchants at a disadvantage.

"Prior to mobile, the merchant completely controlled and managed the consumer shopping experience" with various displays and promotions once the consumer set foot in the store, said Thad Peterson, senior analyst with Aite Group. "Now, with mobile, suddenly the merchant has very little control over anything."

Retailer applications and geo-location technology will help merchants know who and where their customers are, and provide more data related to buying habits, but a consumer will have a much narrower focus about what matters.

With mobile devices, consumers control what they want to look for, as well as how and when they do those searches, said Peterson, who spoke about the subject at the annual Mobile Payments Conference in Chicago. "The consumer has gone from not having any control, other than showing up at the store, to totally controlling the experience with a retailer."

However, merchants have the ability to more effectively engage with customers through various channels, which presents its own set of challenges and doesn't automatically translate to a seamless payment. "The challenge for a lot of retailers is to manage the omnichannel experience," said Tim Spenny, card and payments expert with GfK Financial Services.

Through research at GfK, Spenny said it has been apparent that a "disconnect" exists between what consumers experience online, on their phones and in the stores.

"For traditional retailers and financial institutions, it creates an environment in which they don't really know their customer," Spenny said. "They have to create a consistent experience in which they leverage the data they have on their customers to create an experience that is positive, rather than disjointed."

Those in the payments industry have learned their trade by mastering or co-existing with various systems, from customer relations, to accounting, to payments and marketing, Aite's Peterson said.

"We look at that as the way to create an omni-channel experience," he added. "The fact of the matter is, young consumers don't care about those systems."

Those consumers see one thing in their mobile device and they know what that device is supposed to do, Peterson said. In that manner, payments companies and retailers need to shape strategies for a "uni-commerce."

The proliferation of connected devices, whether they are wearables, cars or appliances will move consumers closer to embracing mobile or embedded payments, said Evan Bakker, research analyst for BI Intelligence.

"You can see a future, not that far off, in which each consumer has five devices," Bakker said. "For retailers, that means it opens up more platforms for them to get their brand top of mind in the consumer."

The U.S. can create its own unique market in embracing connectivity and going beyond just applications loaded on a smartphone, Bakker added.

The Starbucks mobile app has become the gold standard for mobile payments because of its popularity with customers. But it also involves good coffee and consumers who are addicted to it, two factors and a unique audience that other retailers have not yet matched.

Dunkin' Donuts has had some success through mobile channels, and others such as Walgreens integrating loyalty into Android Pay and Apple Pay, and CVS Pharmacy tying in mobile pay and loyalty into its app, are advancing mobile capabilities. Walmart has also made the splash as a major retailer with its own payment application in Walmart Pay.

It is easy to be impressed with Starbucks because of the 12 million customers using the mobile app, but such a high-water mark doesn't come without some expense, said Daniel Csoka, managing director of Mobile Money Matters, a global Fintech media, analyst and consulting firm.

"They have 1 million calls to customer service every month asking about service related to the mobile app," said Csoka, who noted he previously worked with a company involved in Starbucks' customer service operations. "It's the best app out there, but those service numbers are staggering."

Michael Moeser, director of payments for Javelin Strategy & Research, feels that mobile payments can definitely improve the retail experience.

"I think retailers understand mobile and are responding," Moeser said, pointing to Papa John's pizza restaurants, which handles 60% of its business through digital channels. "People tend to love their app," he added. "You can make your pizza right on the app, and can pay for it through the pay sharing feature of Pay with Venmo, where you can easily split payments with your friends for the pizza."

The number of consumers across all age groups saying they would allow a retailer to use geo-location to keep track of where they are at if it meant more savings and rewards could be sent to them by that retailer, continues to grow each year on Javelin surveys, Moeser said

"As we look at payments back in 2013, about 27% of payments made at the POS were made with paper -- cash or checks -- and we see that going down to about 22% in 2020," Moeser said. "People are getting the message and changing how they pay."

Citing Visa's collaboration with Uber on consumer offers this week, Moeser expects mobile wallet providers and payments companies to seek more partners in the future to help advance mobile payments and connected experiences.

Consumers can expect to see larger retailers completely change their approach to customer engagement, said Richard Ventura, vice president of business development and solutions for NEC Display Solutions of America.

"When I went to Best Buy five or six years ago, it was just aisles and aisles of products," Ventura said. "Now they are 'experience centers' because Apple has an area, Samsung has an area, Microsoft has an area. People are coming in to actually experience the product."

Mobile has created that type of transformation, and will be the order and payment mechanism inside these retail "experience centers" in the future, Ventura added.

Subscribe Now

Authoritative analysis and perspective for every segment of the payments industry

14-Day Free Trial

Authoritative analysis and perspective for every segment of the industry