Last week we discussed how digital marketing was finally taking off after what some feel was a slow start. Today we look at another technology that many marketing experts have been preaching will be a game-changer. The technology is mobile payment systems. While there are many flavors of mobile payments, the ones that appear to be gaining the most traction are systems that conveniently allow purchasers to simply tap, point or wave (a.k.a. contactless payment) their mobile device to make a payment.
Mobile payment technology, to some extent, has been around for a several years and has attracted major banks and credit cards companies as well as Google, with its Google Wallet, and few others. Back in 2012, we discussed this technology and indicated that several leading retailers, including Walmart, Target and CVS, were working together to develop their own mobile payment system. However, the system the big retailers are working on is different because, unlike nearly all the other systems on the market, control of the financial side resides with the retailers and not with the big financial houses.
But is it really a big deal who handles the money? You bet! So big that it appears these retailers are circling the wagons in an attempt to keep out competitive mobile payments. As discussed in stories in both Los Angeles Times and USA Today, top retailers have put a stop to allowing customers to pay using a new mobile payment service introduced last week by Apple. According to these stories, the issue is all about control. The retailers, and specifically the group they belong to (Merchant Customer Exchange) that is developing the technology called CurrentC, want to bypass banks and credit card companies and avoid paying credit card processing fees. These fees range from 2% to 4% per transaction. While these fees may not seem to be very big, consider that the mobile payment market in the U.S. is forecasted to be $90 billion by 2017. Thus, the CurrentC mobile payments system, which is linked to users’s debit card accounts, offers retailers the potential for enormous savings while accepting other payment systems may still leave retailers on the hook for huge processing fees.
Whether the big retailers will actually implement their own technology remains to be seen. They are only in the test market phase, and much can still happen to derail their system. Also, potential backlash from customers who want to use Apple Pay or another system could create even more problems. If Apple and others remain strong, one could see that, even though members using CurrentC will have their own system, retailers will have little choice but to accept other payment systems.