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April 30, 2015

Key strategies for mobile payment success

Security, privacy and collaboration key for mobile payment success.


The key elements for an effective mobile payments scheme is a strong focus on the benefits to the end-user, value-added merchant models and continuous use case innovation through collaborate cross-sector relationships.

To help build the adoption of mobile payments, customers need to be assured of their security and privacy while systems must provide simplicity. From the merchant point of view though, a preference for a flexible and affordable system that will help convert more users is key.

Mobile wallet/payment applications have flooded the market recently, which has created a diversity of payment processing technologies in the POS realm. However, Pyramid Intelligence point to Magnetic Secure Transmission as the latest and most disruptive technology.

MST is able to virtually convert any credit card swipe terminal into a contactless M-POS reader which will reduce the cost and lead time of merchant acceptance.

The successful examples of m-payment providers come when they are leveraging partnerships to help create a robust line-up of payment products that are widely used and accepted.

Those who are looking at opportunities in the m-payment market have to work with other key ecosystem players to build applications that will address user priorities and that can be deployed universally by merchants.

Data analytics and integrated campaign engines are being monetised by the m-payment players by taking a cut of personalised discount offers delivered to users through their payments platform.

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The promotions then generate revenue for both the merchant and platform provider as it boosts the transaction volume. Pyramid expects this model to proliferate, due to the benefits it brings to all parties.

Currently however, m-payments represents only a small portion of consumer payments, with only 1 in 5 executives surveyed using mobiles for more than 25% of payments, with the main area of usage in Asia-Pacific with 24% and in North America only 11%.

Merchant payments is another value-added model which holds some promise, particularly in developing countries. This would help m-payment providers to optimise their infrastructure and generate additional revenue streams.

A strategic approach to market is required to build a viable business in a competitive market. A clever app is not enough, instead success lies in attaining widespread uptake from customers and merchants.

M-payment providers need to prioritise a targeted set of use cases and work closely with merchants to ensure ease of use and reliability. With trust a major factor in uptake, a targeted set of use cases are required to build this trust.

If security, simplicity, speed and convenience issues are addresses then consumers are more likely to embrace m-payments. Additionally, a developed ‘pipeline’ of online and offline payments to drive growth is required.

Collaborative agreements with ecosystem players are essential to reach the desired breadth of payments products.

PAYm for example has the potential to become a major ecosystem due to its access to over 40 million checking account holders. Currently 16 banks and financial services cooperatives offer the PAYm payments service, these cover 9 out of every 10 checking accounts in the UK.

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