The Merchant Headache in Proximity Payments

Much thought has gone into consumer sentiment on mobile wallets and how to drive their adoption at stores like Kroger, Old Navy and Walgreens. Often lost in the hours spent embedding loyalty features and optimizing security platforms is consideration for the second party in a commercial transaction: the merchant.

Some wallet providers have made the mistake of believing that merchant acceptance of a mobile wallet (m-wallet) is all that’s required on the commercial side of wallet deployment. In reality, critical mass of an m-wallet can only be achieved when consumers have consistently executed mobile payments with a given wallet and built trust that the solution will deliver each and every visit to the coffee shop or grocer. Consumer trust is shattered the moment that a store fails to accept payment from a wallet for which it is listed as a partnering merchant.

Management’s commitment to purchased solutions plays a critical role in an m-wallet’s early success. CVS management’s lack of commitment to their PayPass point-of-sale (POS) terminals has become evident at a Chicago outlet as the pharmacy has failed to make its fleet of NFC-enabled terminals regularly available for use over the six months that they’ve been installed. Similarly, TabbedOut’s cloud-based software wasn’t available for mobile tab-opening during a recent visit, despite bartenders’ knowledge of the software’s presence in their systems.

imagesIt’s wishful thinking that one customer’s disappointment in non-acceptance of a mobile wallet will be a call for action from store management. Instead, it’s simply less likely that the solution will be endorsed by consumers, making its time short at the physical point-of-sale.

While some merchants have failed to configure purchased solutions, others have failed to educate and train staff on accepting mobile wallets. Such was the case at a local Italian carry-out restaurant, with cashiers not even aware that their restaurant was listed as an available merchant on the PayPal mobile app. Another example came at a local Thai cuisine when hostesses were unable to locate my pre-order in their system.

While seamlessness of pre-ordering will be forever dependent on the merchant, wallet providers should strive to make in-store (proximity) payments as consumer-directed as possible in the interim. Despite providers’ push for the ‘invisible payment’, the historical existence of a card swipe has induced a consumer mentality of self-action when executing a payment. So, rather than telling the cashier that you’re paying with PayPal (which is more dependent on staff member training), it’s often easier to simply scan or tap your smartphone against an appended reader.

Wallet providers must remember that the sexiest solution isn’t necessarily the one that will replace leather. The one-dimensional, unattractive Loop Fob (which works at 90% of magstripe POS terminals) just may be the wallet that resonates with consumers in the near-term due to its close resemblance of the sub-conscious swipe of a credit card. Providers can do themselves a favor by reducing the merchant’s role in mobile transactions at the physical point-of-sale as a way of building consumer trust in solutions.

This entry was posted in Food & Dining, Payments, Retail. Bookmark the permalink.

One Response to The Merchant Headache in Proximity Payments

  1. Pingback: Protecting Fragile Customer Experiences in the Mobile Channel | Ahead of the Curve

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s