The Direction of Wind - Mobile Payments & Future of Cash

THE DIRECTION OF WIND- MOBILE PAYMENTS & FUTURE OF CASH

“I skate to where the puck is going to be, not where it has been”

                                                           -Wayne Gretzky

Once called as ‘the greatest hockey player ever’ by the National Hockey League (Ice Hockey, USA) itself, Wayne Gretzky revealed his success secret in the form of the above quote. Every word of it as much applicable to marketing, or for that matter any other sphere of business, as it is to hockey.

To stay ahead in others, marketers need to catch trends and develop strategies accordingly. In a world of ‘information excess’ it becomes essential to spot the right opportunities and then put in best efforts to exploit them. So when a marketer observes that during the Christmas quarter in United Kingdom, 51% of online retail sales were through mobile devices1, a marketer should understand that mobile payments need special attention right away!!  

Mobile Payments? What are they anyways??

In most simple terms, mobile payments refer to all those transactions which are initiated, authorized or confirmed through a mobile device such mobile phones. Obviously such payments act as an alternative to cash payments and due to their convenience factor is growing in popularity (coupled with the promotional pushes of course!). [pic 1]

Figure 1 shows some common types of mobile payment modes. Some of these such as Mobile Wallets (Mobikwik wallets), Near Field Communication Payments (Apple Pay), QR Code Payments (Paytm payment systems) etc. are already making inroads in consumer’s daily life. Over the years more such mobile-based payment methods are expected to come up.[pic 2]

Where Do They Stand Today- A Fact Check

In 2015, the worldwide mobile payment revenue stood at about 450 billion U.S. Dollars2. It is expected to cross 1 trillion U.S. Dollars mark by 2019! Criteo in its latest report ‘State of Mobile Commerce’ (Quarter 1 of 2016) found that over 50% sales of leading 25% mobile retailers came from mobile only devices for the first time, which it termed as the ‘tipping point’ in the industry.

[pic 3]

It is not only in the developed countries like USA or UK where the mobile payments are getting increasingly popular but also in developing countries like India herself, the mobile payments are making significant progress. Deloitte mobile consumer survey 2015 says that ‘Phone owners in India are highly interested in mobile money transfers and in-store payments’ with 71% respondents saying that they would like to use in-store mobile payment facilities and 54% showing interest in mobile money transfers. Country’s largest mobile payment platform, Paytm, has already crossed 120 million wallet transactions3 in February 2016 and is poised for multi fold growth in near future.[pic 4]

The RBI in its report on medium term path on financial statement noted that, ‘Innovative delivery channels, such as mobile wallet and e-money coupled with regulatory changes to allow interoperability across banks and non-banks, seem to hold the key to a more efficient payment system and reduce the fascination for cash’.

Implications for a Marketer

Payment methods not just facilitate transactions but they add value to the consumer experience. Especially for unconventional payment methods like mobile payments the influence on consumer experience is very high. With ease of using these payment experience a marketer can gain significant brand loyalty. Also, the inconvenience of using cash in the form of carrying it all around or working with the requirement of change, gives a lot of room to mobile payments.

Seamless integration of merchants and buyers through the use of technology provides amazing convenience in the form of fast and easy transactions using just the mobile devices. Such payment methods also provides enough scope for efficient sales promotions as mobile devices are very close to its users and hence a promotion on such devices, for instance in the form of incentive for using mobile payments, can lead to extra revenues for several business firms.

Market Leaders Showing The Way

Even though third party payment systems such as Apple Pay in United States and Paytm in India are trying to enter the markets quiet aggressively, there are few market leaders who are already making most of their own mobile payment systems (closed loop payment system). [pic 5][pic 6]