Pay Now ... or Pay Later

By Samuel Greengard Print this article Print
Mobile Pay

Retailers that lag in the mobile wallet space will miss an opportunity. This tech can bypass chip-card transactions and support 360-degree customer interactions.

It's been just over a year since Apple Pay hit the consumer marketplace. While a growing number of retailers and e-tailers have adopted the digital payment solution, it makes up only a small percentage of the overall payment credit card and debit card universe.

According to a recent ITG research report, Apple Pay's figure hovers at around 1 percent of all dollars, while Google Wallet and Android Pay account for about 4 percent each.

Some have tagged the digital wallet as a failure or, at least, a disappointment. This a myopic view. Whole Foods now processes about 20 percent of its transactions through Apple Pay, and this accounts for 28 percent of its sales. Walgreens tallies 19 percent, and McDonalds boasts 11 percent.

Unfortunately, the vast majority of retailers either don't accept payments by mobile wallets, or employees and customers don't even know that the business supports them. Many stores lack signage indicating that the mobile payment option is available.

The value of services such as Apple Pay and Android Pay isn't lost on a small but significant portion of the buying public. These payments are lighting fast, secure and extremely convenient. You hold the phone up to the terminal and—viola!—Apple Pay goes through.

Nevertheless, many retailers are struggling to get EMV (Europay, MasterCard and Visa, the companies that created the standard) chip-card systems operating, let alone mobile wallet payments. I've gone into numerous stores that completely blew the October 1, 2015 federal government deadline. In fact, various studies indicate that only about one-quarter of retailers were equipped to meet that deadline.

Retailers that lag in the mobile wallet space are missing an opportunity. Not only can a mobile wallet bypass slower but more secure chip-card transactions, it also can facilitate a 360-degree customer interaction.

For instance, Walgreens has just integrated its loyalty program with Apple Pay—the first retailer to do so. Shoppers can now pay with their phone and automatically receive loyalty points. Other retailers, including Panera, Kohl's and Wegmans, are reportedly following suit.

Operating with an industrial age mentality in the information age may be passable for now, but, at some point in the not-too-distant-future, the landscape will shift. Moreover, privacy concerns are growing, and consumers are becoming more selective about organizations and privacy standards. Ask Target, which has introduced chip-and-PIN cards that add additional security to transactions.

To be sure, "innovation" and "security" aren't just buzzwords or mantras to repeat at board meetings or steering committees. Smart organizations look for ways to embrace leading-edge technologies—all while introducing faster, more efficient and more secure ways to interact and transact with customers.

This article was originally published on 2015-11-25
Samuel Greengard writes about business and technology for Baseline, CIO Insight and other publications. His most recent book is The Internet of Things (MIT Press, 2015).
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