Mobile technology seems to be in the news quite a bit today.  Instagram, a social photosharing, site was  acquired by Facebook.  AisleBuyer, a line-busting mobile commerce application, was acquired by Intuit.  Best Buy is looking at mobile strategies to combat the phenomenon of “showrooming,” in which consumers come to the retail store to look at the product, then make the purchase from Amazon, or eBay or another eCommerce site.  Mobile commerce, mobile payments, mobile social.  It seems that mobile is everywhere.  What does that mean for merchants?  What should merchants be looking for in the mobile revolution?

Something that often gets overlooked with the introduction of a new technology is that of strategy.  Merchants often rush to the new technology that promises convenience, increased conversion, and cool factor.  But the question that we should be asking is, “Why?”  Does mobile even make sense for me?  Consider a traditional, independent bookstore.  They have a storefront and inventory.  They get foot-traffic and have a traditional Point of Sale (POS) system that is integrated into their inventory management system.  What would a mobile acceptance channel add to them?  On the other side of that coin, consider a crafter or a locksmith.  Often, these professionals operate in the field – at craft fairs or in parking lots.  They have traditionally accepted cash or checks.  Recently they’ve begun to use either a “knucklebuster” or an IVR system to accept payment from debit or credit cards.  For them, mobile payment acceptance makes sense – they can increase their conversion rate (and sometimes their average ticket size), cut back on “bad” transactions with real-time authorization, and add convenience for themselves and their clients.

Another factor that must be considered is security.  Just because a payment is mobile, that doesn’t mean that security goes by the wayside.  In fact, some (including myself) may argue that security becomes more important.  Encrypted card readers are just one layer, albeit a very important layer, of protection for the payment process.  Choosing a service provider with a demonstrated history of compliance with the Payment Card Industry Data Security Standard is another important step in protecting mobile payments.

Mobile payments are an exciting innovation in the payments world.  They offer significant advantage, but as with any tool, they must be managed appropriately in order to recognize the maximum benefit.

Dr. Heather Mark, PhD.  SVP, Market Strategy