Retail’s mobile tipping point rests on payments

The next big change providing utility in mobile devices will be the adoption of the “mobile wallet” technology and solutions. The complete solution consists of a user interface integrated with a secure element chip, where your personal data (credit card number, passport ID, shopping history and coupons) is stored. The user interface allows the securely stored data on your device to interact with NFC applications so the device can be passed over a POS terminal to enable payment.

Already 70% of the world’s population now have mobile phones. That’s more than 5 billion mobile subscribers, and in countries like the US, 9 in 10 people are subscribers.  Mobile phones may also include mobile devices, which provide utility, information and entertainment to the user.

Starbucks Coffee announced in January that more than 6,800 of its locations would accept mobile payments. Although its solution is not as sophisticated as the one for mobile payments—it’s quite process heavy and the user needs to spend time setting it up online rather than accessing it on the mobile device—it is a step in the right direction, and more than 3 million people have paid for Starbucks items through it.

The tipping point for this device’s widespread use is its simplicity and whether or not the mobile wallet’s assurances of security and standardization will be feasible for its operators or the banks. It’s likely that there will be an operative collaboration with clearly defined functions. This is being organized and prioritized right now by Apple, Google and other mobile platform providers. In addition, AT&T, Verizon and T-Mobile are involved in ISIS, which is a national mobile commerce network that aims fundamentally to transform how people shop, pay and save.

I expect that 2012 will be the year when these devices really take off as investments are made and retailers embrace proven technologies. The proof will come, in part, from NFC-enabled mobile payments at the London 2012 Olympics, which are being enabled by sponsors Samsung and Visa.

In addition to mobile payments, the shopping experience will be enhanced by other in-store initiatives, such as wireless-enabled retail locations, display advertising and social data integration. This will require consumers to use their mobile devices to scan tags, bar codes and even packaging. They will be rewarded with access to exclusive content online, reviews and price comparisons. This shift should cause retailers to rethink in-store engagement and move toward creating more immersive and compelling experiences to help drive loyalty.

Urban Outfitters is a retailer that is moving the technology forward. It found that multichannel shoppers spend two to three times more than single-channel shoppers, and that consumers who engage with the brand across three or more channels spend six times more than the average customer. They are actively developing in-store experiences, enabled by mobile devices and linked to Web experiences that are aligned to drive home brand messages and conversion to in-store purchase.

The proliferation of smartphones in North America will also yield further deployment of entertainment-based mobile experiences with rich media and the games, including content-sharing, check-ins and apps. Mobile gaming integrated into marketing and branding campaigns will ultimately lead to more valuable, technology-enabled connections.

The future of mobile will reside in these retail environments with device-driven utility, information and entertainment, and consumers who can pay with their devices.

Nikolas Badminton leads the planning and strategy team responsible for creating digital, mobile and social strategies at Tribal DDB. He is director of digital strategy in its Vancouver office.

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