How to Drive Mobile Payments Adoption: Eliminate One of the Human Counterparties

Several years back, some of the nation’s bigger banks introduced a fleet of ATMs that turned the once-static ATM experience into a much truer alternative to the bank teller. The newer ATMs enabled consumers to deposit checks and cash on their own, in addition to conducting standard withdrawals and balance inquiries. And now, with the proliferation of smartphones, that ATM experience is poised to expand even further, through capabilities like pre-staged cash withdrawal and cardless authentication.

This mobile-driven innovation is primed to make its way to less-complex, self-serve terminals like vending machines and parking meters. Originally designed to collect payments for entities without on-site staff, these machines have come to assist businesses with payment terminals located away from on-site personnel, such as transit centers and gas stations. Their presence has expanded to grocery stores and pharmacies – in the form of smaller kiosks – to expedite checkout and redeploy cashiers to other roles.

But unlike ATMs, which are essentially tools for managing a checking account, self-serve machines are much more about facilitating quick and easy payments. A better transactional experience can drive incremental revenue, especially for older vending machines that don’t even accept credit cards. And the effort to upgrade machines can be as simple as supplementing current payment acceptance portals – like credit card terminals – with detachable smartphone-reading hardware.

untitledBut we know by now that the rollout of mobile pay needs to deliver some form of enhanced user experience along with it. While I wouldn’t expect parking garages to introduce their own loyalty programs, such could be highly popular for soda brands like Pepsi (remember all of the bottle cap sweepstakes?). Parking garages might instead use a mobile app to help parkers remember their car’s location or distribute digital coupons on behalf of nearby retailers.

Fortunately, this enhanced user experience would take place almost exclusively on the user’s mobile device, eliminating substantial hardware makeover for the machine. The key will be developing sufficient value-add to incentivize consumers to retain a separate app on their smartphones. The current Red Box mobile app allows customers to see which movies are available at specific kiosks and to reserve a movie ahead of time. In this case, a pre-payment option could be made available that generates an access code to be used at the kiosk, eliminating payment at the point-of-sale completely.

One advantage that self-service machines have over actual stores in implementing mobile payments is that no training or up-skilling of staff is required once the hardware is configured. Instead, the required education relates to making it easy for the consumer to quickly understand how to pay with his or her smartphone at the machine. Even more important is making it known that the machine accepts payment by smartphone through marketing of the mobile app or clearly displaying mobile acceptance on the payment terminal.

It’s tough to tell which technology would facilitate payment at the varying self-serve machines – from cloud to bar codes to NFC. Due to its infancy and reliance on humans for authentication, BLE would likely be out of the equation. The use of pre-payment through the cloud (the method that ridesharing companies like Uber use to process payments) may be popular if machine operators can seamlessly integrate tokens in their payment hardware. Regardless, self-serve machines are long overdue for this type of innovation – innovation that could expose a broader group of consumer to mobile payments.

The Rub: The relative ease in installing add-on hardware at self-serve machines with many opportunities for enhanced user experience makes the devices attractive outlets for expansion of mobile payments.

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