Mobile Payment Offers New Business Opportunities
Apple Pay, Google Wallet or Airtel Money? Mobile wallets are leading the world towards cardless shopping. As we head towards a technologically advanced era, the need for debit and credit cards is gradually diminishing.
Gartner predicts global mobile transaction market to be worth $721 billion with more than 450 million users by 2017. Forrester put the numbers at $90bn. And, majority of mobile wallet are expected to be in their 50s, according to a Citibank survey.
Mobile payment is still in its infancy in some countries like India, as concerns about security still persist. The mobile payment requires personal data storage on the device and it is transmitted via Near Field Communication (NFC) technology on to the PoS device.
Despite the challenge, none can rule out the potential of mobile banking as it is being adopted across industries. Banking has already taken the lead. PwC says mobile payments are a win-win for both banks and service providers. The use of these devices will build customer loyalty, increase the amount of assets customers keep in accounts and open up new ways to serve customers.
While financial institutions can’t deny the emergence of mobile payments, they can see opportunities in it. For financial institutions to succeed, they need to consider some organizational changes that will enable them to play new roles and deliver new services in an open, collaborative, and fast-paced ecosystem. PwC says there are hurdles to mobile payments adoption, but innovative players will adapt, test, learn, and adopt.
Alberto Jimenez of TechCrunch writes that mobile payments just don’t end with cash payment. “There are a number of activities that take place before and after the transaction that can deliver tremendous value to the consumer and the merchant, both in terms of relevance and the ability to drive top-line growth. These activities include innovative, data analytics-driven ways to discover new products and services, save money via price-comparison tools, and deliver immediate gratification using location-based services, just to name a few. “
Business Insider Intelligence believes that once people adopt the behavior of paying their friends and family with their smartphone, the barrier to in-store mobile payments will be a lot less significant.
The demand for mobile payments is expected to go up because of new revenue opportunities: $20 Billion in play and new business models and partnerships driving adoption and usage, says PwC.
The revenue opportunities include new fees from mobile payments and value-added services like mCommerce, mobile ads, mCoupons and virtual currencies.
Other than banks, Forrester also lists three segments that would see higher mobile transactions: in-store mobile payments (proximity payments); mobile commerce (mCommerce); mobile peer-to-peer (P2P) and remittances.
According to a study by Mahindra Comviva, mobile POS solution providers should also offer open APIs to support integration with third-party applications, for example enterprises such as banks and insurance who have equipped their field force with app can leverage APIs for premium and deposit collection, safeguarding existing investments.
“The implementation of mobile POS solutions is not without its challenges and technology executives must work together to select the right solution that can play well with existing back-office systems, adapt to rapid change, and meet the expectations of a new breed of the connected shopper,” says Srinivas Nidugondi, Senior VP and Head, Mobile Financial Solutions, Mahindra Comviva.
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