Mobile Wallets Continue to Gain Consumer Acceptance
Mobile wallets in some form have existed for nearly as long as smartphones. Recently there has been a tremendous increase in the number of mobile wallets available to the consumers as the payment technologies has heated up.
Confusion about mobile wallets and how they work abounds. Here is a quick guide to help you navigate the maze.
What is a Mobile Wallet?
A mobile wallet is a mobile-based virtual wallet. Money is preloaded into an account that the consumer created with a service provider. It can then be spent online or offline at any merchant listed with the mobile wallet service provider.
Transactions You Can Make
You can use a mobile wallet to pay for just about anything – from utility bills to offline retail payments. In today’s world, most of your daily financial transactions can now be performed using a mobile wallet.
Mobile Wallet Technologies
There are two primary technologies being used to create mobile wallets. They are:
Quick Response Codes (QR Codes) are two-dimensional machine-readable codes usually consisting of a matrix of black and white squares. The matrix that can store short pieces of information such as text or a link to a web address. The data can be read and displayed by a smartphone.
A QR code must be printed on each product. An app is required on the mobile phone in order to read the code. Users link the app to their bank account or load a certain amount of money onto the app.
Near Field Communication (NFC) exchanges data between devices using close-proximity radio communication. Tags can be scanned without a direct line of sight and therefore can be integrated within products and/or hidden from view.
NFC-enabled mobile phones do not require any additional software and can work be a substitutes for payment cards. Applications securely store the consumer’s payment information from a credit card, PayPal, debit card, etc. in a certified environment.
NFC technology offers an unprecedented opportunity for brands to convey a tech-savvy image while delivering valuable offers and collecting vital consumer insights.
Both NFC and QR codes link the physical with the digital worlds and trigger the payment process by identifying the shopper and his/her payment information, a certain product or application. Although using different approaches, both technologies can be used in similar settings.
NFC technology was slower to catch on than QR codes. But many analysts believe that NFC technology is poised to replace QR codes as the mobile wallet tool of choice because of their ease of use. QR codes can require several steps by the user. NFC codes only require any that the user bring the device into close proximity to the tag.
QR codes got a huge head-start over NFC, mainly due to the fact that Apple not embraced NFC technology and continues to use QR technology.
But other tech giants like Google Wallet, Samsung Pay, Paypal, CurrentC, and SoftCard have opted to use NFC technology in their mobile wallets.
Pros and Cons for Your Business
Adapting a mobile POS payment system may come with upfront expenses to your business. Older system hardware and/or software may not accommodate near-field communication or QR codes. Fortunately, there are low-cost cloud-based POS systems available that can reduce the impact.
But now for the positives for your business:
- Consumers want more convenient ways to spend money
- Reduced fraud as mobile wallets are hard to steal or duplicate
- Decreased payment times
- Lower processing than fees traditional cards
- Builds customer loyalty through sales & incentives sent directly to smartphones
- Provide additional ways for customer payments
- Makes payment process more convenient
- Gives additional payment choices
- Makes your business more welcoming than the competition
- Transfer additional info to customers in real time
Is This The Year?
Is 2016 the year you adopt a mobile wallet system for your business? Industry analysts predict that by 2017 over 1.5 billion smartphones will be sold globally by 2017 and mobile payments in US to be $90B. So what’s the hold up? Shouldn’t we be rushing into this brave new world?