Which mobile payment model and technology will prevail? The debate rages on with no end in sight. Empower your customers to do it any way they choose, and respond flexibly to emerging consumer demands without engaging in guesswork or waiting for the dust to settle. This series explores the new normal and how you can maintain and gain wallet share by empowering your customers through the mobile payments revolution.

As customer buying behavior evolves, keeping track of new technologies – and figuring out where to play – may seem daunting.  In truth, catering to a variety of consumer preferences is easier than you think. Making purchasing easier for customers with mobile payment and plastic cards options will improve the customer experience, ultimately positioning you ahead of the competition.

Mobile Wallets: More to Unfold

Mobile phones have emerged as the ubiquitous, always-on device.  According to a recent TIME Mobility Poll, 84 percent of people say they couldn’t go a single day without their mobile device, and 75 percent of 25- to 29-year-olds even sleep with their phones.  Meanwhile, consumers increasingly trust secure smartphone technology to complement payment and store-specific loyalty cards, continuing the trend toward convergence.  Harris Polls states that 44 percent of smartphone users are interested in using their smartphones to process in-person payments.  As that number grows, mobile wallet technologies like ISIS, Google Wallet and Apple’s Passbook are pushing mobile wallets closer to the mainstream.

Smartphones have become extensions of their owners – and they know us very well. As companies take greater advantage of GPS location, social network and search data, consumers will come to expect the highly personalized interactions and transactions that result.

Plastic Cards: The Quintessential Credential

While the emergence of mobile wallets may be the next big thing, their usage will likely overlap plastic cards – not overtake them. The way people pay is deeply entrenched behavior – new methods can improve the experience, but tried and true payment methods don’t just disappear.  Take paper checks for example. They’ve been out of vogue for decades, yet still represent 22 percent of non-cash payments.  We can expect a similarly long period of overlap in the evolution of plastic and mobile payments.

It all whittles down to the simple fact that consumers demand choice, not only in goods and services, but also in how they pay for them.  In an era of infinite options, one-size-fits-all doesn’t.  To satisfy the masses, businesses need to change how they think about traditional and mobile wallets, and cater to both. For more on this topic, visit Datacard Edge next week.  We’ll be delving in to tips for developing your mobile commerce roadmap.

How has mobile technology impacted your consumer experiences?  Tell us about it with a comment.

Which mobile payment model and technology will prevail? The debate rages on with no end in sight. Empower your customers to do it any way they choose, and respond flexibly to emerging consumer demands without engaging in guesswork or waiting for the dust to settle. This series explores the new normal and how you can maintain and gain wallet share by empowering your customers through the mobile payments revolution.

Take an Open Approach to Mobile Payments: 3 Lessons from the Past

Over the past two decades, the internet has shown us that consumer taste is more varied than we ever imagined.  In a world of endless options, today’s consumers want and expect choices beyond what they purchase. How they shop and consume entertainment, where they access information, and who they entrust with their data is all a matter of preference.  For this reason, winning the mobile wallet war won’t be done by controlling and guarding your wallet’s ecosystem, but by putting consumer choice ahead of protectionism.

In the 1990s and early 2000s, companies employed a variety of measures to protect old business models from emerging internet trends. Walled gardens emerged as an ill-fated way to protect revenue. Today’s walled gardens take a new shape designed to tightly control the customer experience and lock customers into a predetermined set of products, services and content. This has worked for companies like Apple who have managed to provide an outstanding experience in the entertainment sphere. But when it comes to their money, consumers might not be so willing to relinquish control.

There are a few lessons to be learned from the early days of the internet, when 56k dial-up was blazing, up-to-the-minute news was still a novelty and Giga Pets were all the rage.  Check out these 3 examples of defensive blunders – and be sure not to take a page out of their playbooks:

1. America On Line

At the height of its popularity in 2002, AOL had over 35 million subscribers paying for not only dial-up internet access, but also access to email, instant messaging, security software and other services.  As similar services became available from competing companies at no charge, AOL followed suit in 2006, offering these services for free to anyone with a broadband connection.

Consumers met the change with a ‘too little, too late’ attitude.  AOL was unsuccessful at transitioning its remaining dial-up subscribers to broadband.  As of June 2012, the company had just 3.3 million subscribers, 3 million of whom are still dialup subscribers, an industry in obvious permanent decline.

Financial institutions resistant to offer online banking experienced a similar plight.  Online banking was an experiment in the ‘80s and an alternative in the ‘90s.  Today, financial institutions without an online channel can’t compete, and those that dragged their feet in the early days lost customers as a result.  Merchants that don’t get mobile payment-ready now could face the same fate.

2. The New York Times

In 2005, The New York Times experimented with a service called TimesSelect that blocked content from users who didn’t pay the $49.95 annual or $7.95 monthly subscription fee.  The service granted access to the work of its columnists and to the newspaper’s archives.   Two years to the day after TimesSelect’s genesis, the service ended when the newspaper found their projections for paid subscriber growth were low compared to the growth of online advertising.

More readers were coming to the site from search engines and links on other sites than directly to NYTimes.com. These indirect readers represented an opportunity for more page views and increased advertising revenue.  In addition to opening the entire site to all readers, The Times also opened access to its archives from 1851 to 1922 and 1987 onward.

Likewise, keeping mobile wallet programs open to a range of participants may offer indirect business opportunities to bolster customer engagement.  In addition, deploying open-access contactless technology at the point of sale can help merchants stay ahead of the curve and better anticipate consumer demand.

3. The Music Industry

For decades, the music industry was able to charge high prices – and maintain high profits – for every disc sold.  As file sharing started impacting the industry, its leaders didn’t recognize the internet’s value as a new, efficient way to distribute music, and failed to invest in and develop new technologies.  Rather, the industry attacked Napster and other file sharing sites for copyright infringement.  It took the innovations of technology companies providing legal means of downloading music to open the industry’s eyes to a now obvious fact: consumers would buy music online if it were easy to do so.

The music industry made a critical mistake by protecting ‘business as usual’.  Adhering to old methodologies can prevent businesses from getting leaner, smarter, faster, and competitive in the new, choice-driven economy. Capitalizing on new technologies early will help prepare companies to keep pace with emerging industry standards.

Walled gardens don’t work. In order to see wide adoption, mobile wallets must present clear value – and that value lies in the ability to put choice at consumers’ fingertips.  With the flexibility to support a variety of products, the mobile wallet becomes a platform on which consumers can add app-like modules for their favorite merchants, banks, credit accounts and more.  Support for various transaction-facilitating technologies, such as NFC, SMS, cloud and QR codes broadens the appeal – and the likelihood of wide adoption.

Even with broad adoption of mobile payments, cards will remain the quintessential credential for years to come. Visit Datacard Edge next week when we’ll talk about combining plastic cards and mobile payments for the ultimate customer experience.

How have protectionist measures impacted your experience as a consumer? Tell us about it with a comment!

Which mobile payment model and technology will prevail? The debate rages on with no end in sight. Empower your customers to do it any way they choose, and respond flexibly to emerging consumer demands without engaging in guesswork or waiting for the dust to settle. This series explores the new normal and how you can maintain and gain wallet share by empowering your customers through the mobile payments revolution.

Today’s consumers are adopting new technologies at breakneck speed and rapidly integrating them into everyday life.  Payments will present no exception.  As customer expectations evolve, financial institutions and merchants must deliver smarter, faster, better, more customized solutions.  These 4 emerging tech trends reveal that waiting to define your mobile payment strategy could put you in catch-up mode.

1. Dephysicalization: The End of Stuff

Aside from purists who are willing to pay a premium for vinyl and hardcover books, most of us are rapidly shedding our physical media. Instead of maintaining media centers littered with discs and volumes, we are downloading their digital counterparts (MP3s, MP4s and e-books) and subscribing to on-demand services like Netflix and Pandora.  According to Nielsen Soundscan and Billboard, physical music continues its downward sales spiral, closing out 2012 at a 12.8% decline.  Meanwhile, digital music sales grew 9.1% last year, now accounting for 37% of all annual albums purchases.

Companies are adapting to the new norm. Sony has shut down Sony Optiarc, its division that makes Blu-Ray and DVD drives for desktop and notebook computers, to focus on products and content consistent with the shift toward tablets and smartphones. Financial institutions have also made strides with paperless statements and online banking – making increased usage of mobile payments a natural progression.

2. Convergence: One Device to Rule Them All

Not long ago, daily convenience and entertainment involved a plethora of electronic gizmos, each with its own carrying case, cleaning kit, instruction book and 1 year warranty.  Today, technology is converging into a single device that does it all. The smartphone has become the de facto music player, camera, camcorder, video editor, game console, remote control, remote car starter, thermostat, alarm clock, graphing calculator, personal assistant, navigator, and window to the world.  In a few short years, it has gone from inconceivable to indispensible, ingraining itself into our daily lives.

The payments industry has taken notice as new players have started carving out their place in the market. Google Wallet, an Android mobile wallet app leveraging NFC technology that enables consumers to tap and pay using virtual versions of their existing plastic cards. Square got its start enabling credit card transactions for small businesses and now enables contactless payments for Starbucks.

3. Immediacy & Multitasking: Getting It All Right Now

With the implementation of Pay with Square, a Starbucks barista can now see when you enter the store, track your frequent purchases, and in theory, have your short skim mocha ready before you even reach the counter. Emerging mobile technology is enabling merchants to anticipate customer needs and deliver on them instantly.  Interest in these 1 to 1 customer relationships is exploding as mobile adoption progresses at Mach speed.

The increasing compulsion to multitask, also seemingly driven by mobile adoption, provides more opportunity for 1 to 1 consumer touch points than ever before. A recent Nielson study found that 41% of tablet owners and 38% of smartphone owners used their device while watching TV at least once a day. A separate study by IAB of 5,000 media-savvy individuals revealed that 63% of people connected to a device the last time they watched live TV, and 15% used more than one device.  Both device availability and content are driving consumers to search, share and discuss online.  Surprisingly, multiscreen viewers spend most of their time on non-programming related activities such as email, social networking, texting and web surfing, with a significant number engaging in mobile commerce.

4. Accelerating Rate of Change:  8 Track to Fast Track

As technology advances, so do the people using it.  Those of us who grew up with records, 8-tracks or tapes tend to have a different propensity for adopting new technology than those who had CDs and iPods.  According to a First Data and Market Strategies white paper, 36% of all consumers claim to adopt new technology within the first year it’s available. Among fast trackers – young technology enthusiasts who make and spend money and are always online – that figure is 79%. The same study revealed that almost half of fast trackers already find the concept of mobile wallets appealing.  Considering the evolution in payment popularity from cash to checks to debit to credit, this represents a substantial opportunity for financial institutions and merchants to market to an emerging class of consumers likely to be early mobile wallet adopters.

With consumers demanding less stuff that does more and does it faster, now is the time to prepare for the mobile payment revolution. It pays to look beyond the point-of-sale and recognize that mobile technology is transforming commerce in nearly every way. If you’re looking for ways to insulate your business, you may want to rethink your approach.

Visit Datacard Edge next week, and we’ll explain why building a wall around your services has proven an ill-fated strategy.

What indicators have you seen that point to (or cast doubt on) the imminence of mobile payment adoption?  Tell us about it with a comment!

Host Cyndy Brucato interviewed Todd Wilkinson about how Datacard Group is seizing global opportunities. The interview aired in the Twin Cities on Greater MSP Business on Sunday, May 4.

Traditional branch locations

Many traditional bank/credit union’s branches have already eliminated the 7-14 day wait time for their customers. Providing payment cards instantly and enabling immediate usage is increasingly recognized as a competitive advantage. Some banks and credit unions even offer instant-issue cards with custom background photos, helping them achieve instant gratification for their customers and “top of wallet” stature for their cards.

Retail stores

Financial institutions and their retail partners can instantly issue customized Visa® and MasterCard® co-branded credit cards from retail locations. Customers instantly receive a personalized, activated store credit card and can make a purchase during the same visit. Instant issuance software can be integrated with core applications, card management systems, and data preparation systems and services.  Retail stores can quickly set up individual kiosks or member service areas in store or franchise locations.

Electronic Benefits Transfer Programs (EBT) Programs

Electronic Benefit Transfer (EBT) programs allow government benefits departments to instantly issue reloadable open-loop prepaid cards.  Instantly issuing prepaid cards under municipally-managed benefit programs significantly reduces costs because it eliminates the need to produce and mail checks.

Payroll departments

Instant issuance can be used for programs that include prepaid payroll cards – or instantly issued check cashing card.  With instant issuance, prepaid cards can be issued to employees on site rather than giving out cash.

Self service kiosks

Instant issuance technology is great for self-service kiosks, including those that issue personalized gift cards.  A customer can simply walk up to the kiosk, input an image, enter the gift card amount, and within seconds receive a personalized gift card.

As NFC technology continues to be adopted throughout the world, financial institutions will have a great opportunity to capitalize on this trend by complementing their card programs without major infrastructure investments or changes to their existing processes – thus enabling continuity and consistency between issuing traditional plastic cards and new NFC-enabled applications for mobile payments, and adapting to the changing needs of today’s consumers and external competitive forces.

Datacard Group can speak to how organizations have a new and highly effective way to attract new customers and remain a leader in payments innovation. This presentation will discuss the benefits of having total payment issuance solutions for mobile NFC applications, virtual cards and plastic cards, as well as outlining how the technology works within banking infrastructures.

As the financial industry experiences major change — including the adjustments the recent announcements to accelerate EMV chip migration in the U.S. by 2015 – banks are being forced to re-evaluate their business strategies to minimize costs and increase efficiencies and innovations in their card operations.

Supplementing centralized card production with and EMV instant issuance program can be an initial step in the EMV migration path that all financial institutions can take to help meet long-term growth objectives and the requirements for 2015 EMV migration. In addition, it can help them enhance efficiencies in their card program by helping meet the needs of today’s consumers and drive up profitability and core deposits.

This presentation will look at the factors that are important for successful EMV implementation and outline how operations managers can integrate it into an instant issuance program. In addition, it will highlight the various EMV implementation options that are available, as well as discuss quality measures and ways to stay ahead of the innovation curve.

The movement may have gotten its start in an unlikely place – Sofia, Bulgaria, with the introduction of an SMS-based ticketing system for streamlining the local parking and public transportation system back in 2007 – a monumental advancement from the outdated “punching” system that predated it. What has followed is a complete revolution in payment options around mobile and NFC (Near Field Communication) and mobile commerce, that is offering a better experience for consumers and a more efficient, cost-effective means for streamlining the movement of the world’s rapidly swelling urban populations via subway, buses, taxis and other forms of public transport.

In the virtual era, Payment via NFC phones and contactless smart cards are propelling a lot of these burgeoning initiatives. While the outlook for widespread adoption of NFC is bright, estimates vary on when it will reach critical mass and be present in a majority of phones. Juniper Research placed the number at one in every five phones by 2014. Adding a microSD component to a given solution allows most non-NFC handsets (the major exception being iPhone, though products such as iCaisse bridge this gap) to be included in the fun. Marrying these emerging technologies with an instant issuance card strategy may represent the clearest path to success, while empowering consumers with instant and personalized offerings.

Several major cities have seen widespread adoption of this new model, which includes augmenting mobile payments with instant-issue smart cards. The wildly popular T-Money in Korea is ubiquitous and is incorporated into smartphone (SIM Cards), key chains, T-Money smartcards and other products. The payment solution works on not only buses and trains, but also at convenience stores and other businesses. London, also a pioneer in this space, is introducing new RFID applications for its mass transit system, which will build upon the popular Oyster card, introduced in 2003.

The transit authority in Chicago recently unveiled a plan to introduce an “open-loop” payment system for public transportation. Rather than issuing a single pass or pre-paid card, the “open-loop” system will allow users to pay with contactless bankcards (Visa PayWave and MasterCard PayPass) and eventually NFC phones. The Ventra Card, issued by Metabank, will also be available as a pre-paid and reloadable contactless card. Similar to the T-Money card in Korea, it will also be taken at other merchants and used as an ATM card. You can view a brief animated video on how the Ventra system will work beginning in 2013.

New applications of these emerging contactless and mobile payment solutions are presenting themselves each day. As the mobile wallet unfolds beyond the scope of payments to encompass mass transit, loyalty programs, membership credentials, building access, health services and more, the value proposition becomes clearer to consumers. Increased convenience and greater utility will drive broader adoption – and everyone has an opportunity to benefit.

Consumers become more loyal customers when the payment system is elegant and, ideally, packaged with loyalty programs and incentives. Financial institutions and public transit authorities can also leverage the wealth of data that comes with the (now trackable) consumer behavior. Is mobile commerce “driving” visible changes in your world – either as a consumer or industry professional? Tell us about it with a comment below.

Attributions:
Visa PayWave is a trademark of Visa International Service Association.
MasterCard PayPass is a trademark of MasterCard International Incorporated.

When we think mobile payments, the first thing that comes to mind is likely the ingenious Square mobile payments device, which converts any smartphone into a credit card reader. That device has ushered in a wave of new technologies across a wide spectrum of industries, all of which stand to change the way we think and act the next time we plan on paying with plastic.

We’ll offer a bit of a primer for what’s starting to shake out in the world of mobile payments, with a brief overview of 5 emerging trends:

1) NFC is finally here. Sort of.

NFC (or Near Field Communication) is currently present in an increasing amount of smartphones, including many of the top-selling phones on the Android platform (no sign of it in iPhone 5, but the rumor mill is already speculating on the next roll-out having it). All Windows phones are NFC capable. Blackberry 10 devices will soon be NFC-equipped, as well. Gartner currently has the equation set at 50% of all smart phones being NFC-enabled by 2015.

The benefits of the application are clear – customers simply wave their phone near an NFC-enabled POS to expedite a transaction. What is less clear is whether a standard will emerge that makes the process seamless and intuitive. Google Wallet arrived to much fanfare, but has struggled to gain acceptance (so far). MCX, or Merchant Customer Exchange, is a recently announced collaboration of some of the world’s largest retail players (Target, Best Buy, Wal-Mart, Sears and others) to develop a standard mobile payments platform and eventual app. It’s too soon, however, to know what that effort will yield.

Starbucks is the current poster-child, having successfully introduced a Square–based payment method into 7,000 of its stores. You can now order and pay for your latte in seconds (no instant app to speed up the frothing, however).  It is important to note that Starbucks utilized a barcode reader displayed by the app, rather than NFC, because it more easily integrated with their existing POS system. Meanwhile, McDonald’s is currently piloting a PayPal-based NFC mobile payments option at 30 locations in France.

One of the important side notes in this conversation is that, while NFC-enabled phones represent a fraction of the market currently, microSD cards can be introduced to the vast majority of phones in order to bridge that gap. In early 2012, Datacard partnered with DeviceFidelity’s In2Pay® suite of solutions which use microSD technology to transform smartphones into interactive contactless mobile payment devices.

2) Seamless Conversion

One of the obvious benefits of mobile payments is the ability to expedite a transaction: the more barriers that a merchant can remove from the point of purchase, the greater the conversion rate. Visa payWave, an NFC mobile payment system, proved successful at the 2012 London Olympics. Over 3,000 systems were installed at the park and around the city, speeding up payments for food, drinks and other goods.  The result? Contactless payment transactions doubled during the games, making the case for the speed, convenience and security NFC enables.

3) Moving to the “Cloud”

Security has been one of the x-factors (ahem) “clouding” the adoption of mobile payments as a legitimate solution by consumers, retailers and financial institutions. With a move to the cloud for credential storage, mobile wallets such as the Google Wallet have begun to offer some additional peace of mind, opening up the door for wider acceptance from financial institutions.

4) Loyalty Programs

Whether a digital “punch-card” or virtual “stamp,” the winners and losers of the mobile payments battlefield may be determined by who can not only enrich the POS process, but also use NFC and mobile payments as a means for building customer loyalty. Coupons, frequent customer rewards programs, push notifications and the like will be seamlessly integrated into the mobile payments solution offered by merchants who “get it.” Programs that combine mobile payments with loyalty cards and coupons have been documented by Mobile Commerce to drive an increase of over 25% in average ticket and frequency.

5) Multi-Tiered Integration.

With standards far from established, the likely winners will be those that cast a wide net and offer consumers and business/retail partners the most options. Google, via its partnership with Discover, has been rumored to be working on offering a more traditional plastic Google Wallet card as a companion to its virtual Google Wallet. This will allow consumers to use the card at locations where NFC is not accepted. On the retail side, using mobile payments in tandem with loyalty cards and coupons have netted the biggest uptick in both frequency and average ticket (both in excess of 20%).

Solutions that both embrace emerging technologies and understand consumer behavior stand the best chance of gaining immediate traction in the marketplace. A flexible, open strategy is essential – so is understanding the first-mover (or at least second- or third-mover) advantage. This represents a new channel in which to fight for share and “top of wallet” status. New channels don’t surface everyday (i.e. Internet), so it’s critical to take advantage. The expense of introducing the technology as a part of a given standard operating procedure is far less costly – in the long run – than playing catch-up or not offering it at all.

For banks, all of these strategies for mobile payments represent a completely new revenue stream and provide an instant differentiator for a financial brand. While the form factor has not been nailed down yet (combinations of NFC, cloud, bar codes, QR codes), your customer’s wallet will increasingly be turning virtual. That doesn’t mean, however, you can’t work to have your card inside.

So, back to the original question… what’s in your mobile wallet? Let us know below.

All of these personalized one-to-one marketing trends are driving smaller production runs, shorter pre-printed card stock lifecycles and shorter turnaround times.  However, these needs must still be balanced with tighter profit margins and tougher governmental regulation requirements when managing and evaluating operations.

Considering these trends and the competitive nature of the industry, there are steps you can take to help your card delivery program differentiate itself. Offering innovative products and services that protect your investments and optimize card programs is key. Consider:

1. On-Demand, Inline Color Printing

   This new technology helps balance the needs of marketing and operations teams and provides the flexibility to create more dynamic mailings. Turn blank white paper into highly personalized, full-color card carriers. These high-impact mailings aid brand differentiation and help create a message that resonates.

An entire warehouse can be dedicated to the storage of pre-printed carrier stock that must be ordered weeks in advance and stored and tracked.  If plans changes, or original volume needs are inaccurate, these documents remain on the shelves until they are finally thrown out, which of course directly affects the bottom line.

2. Larger Paper Support
   

   Traditional 8 ½ x 11” or A4 carrier sizes may no longer suffice to deliver obligatory legal disclosures and the key marketing content that generates new revenue and attracts customers.  New regulations have pushed the need to expand card carrier sizes to 8 ½ x 14”, 11 x 17” or A3 sizes.  With larger forms, issuers can now easily attach a card in addition to promotional and educational information, tear-offs and coupons to help drive revenue and decrease expenses – all on one form.

3. Inline Automation for Improved Efficiency

   Reduce turnaround time and production steps with inline automation.  Having an inline system that can both personalize the card and package it for mailing all in one step is ideal. It helps reduce customer turnaround time, minimize production steps, and increase operational efficiency and security by reducing the risk of human error and minimizing the handling of cards.