The future of payments is mobile

As we have seen for several years now, mobile phones play an important role in the early stages of the purchasing process. European consumers, nowadays largely equipped with smartphones, have the possibility to access information simply and immediately.

Thus, the mobile phone is a close ally to consumers during the phases of discovering the need and evaluating alternatives. Mobile phones are used even when the consumer is in the store to compare the different options offered by other sellers. This behavior is now very much part of European habits since digital channels are preferred for these early stages of the purchasing process.

As far as the last phase of the purchasing process is concerned, payment, mobile phones are certainly not yet the preferred channel for European consumers, but many studies predict that it will be a success in the upcoming years.

In most European countries, mobile spending growth is the strongest in 2019 compared to other purchasing channels.

Let’s see why this latest trend in payment management will make mobile phones the preferred channel for European consumers to shop online.

Smartphones, a channel for improving the customer experience

The consumer is becoming more and more demanding in terms of customer experience. With increased competition, it is very easy to turn to another merchant if the proposed experience is not well thought out to facilitate the act of purchase. Thus, consumer demand for a digital and smooth customer experience puts pressure on merchants to meet these expectations. 

Mobile phones offer several advantages that allow merchants to meet consumer needs. 

First of all, since mobile phones now act as an extension of a large part of European consumers, they become a privileged channel of contact with customers. In addition, mobile phones meet consumers' expectations so that they can be free to make a purchase at any time and in any place. Thus, merchants should use mobile phones as a lever for their business, to develop interactions with their customers and to offer an improved shopping experience through this channel.   

On the other hand, the use of mobile phones to make payments allows consumers to be more comfortable with their payment data, which is stored securely. In the event of theft and attempted fraudulent use, no payment can be made with the mobile phone without authentication by the customer. Thus the access and use of payment data are more controlled and secure than with a simple physical credit card. 

Finally, the fact that mobile phones optimize the shopping experience for consumers is also beneficial to merchants, as it improves customer satisfaction through increased convenience and the instantaneous nature of the purchase or subscription act. As a result, satisfied customers will be more likely to make new purchases, and even recommend the merchant to their acquaintances. Thus, for merchants, it is a profitable circle that is set in motion and their income will be maximized with repeated purchases.  

Subscribing to a membership: easy with the mobile 

Today, more and more industry sectors are developing subscription offers that appeal to consumers. Indeed, in recent years, we have witnessed a change in consumers’ behavior that value the access model more than the ownership model, as was previously the case. Quality of service and experience are what attracts consumers today and keeps them loyal.
 
The challenge for merchants in the subscription economy is to facilitate the registration process in order to develop customers’ acquisition. This step is critical for the merchant and must be the most fluid and quickest to reduce the risk of withdrawals. Here too, mobile phones can play a role in improving the enrollment process. For example, by substituting the tedious step of entering their bank details for their telephone number, the customer benefits from a simplified and quick process. 

At SlimPay, we are convinced that in the coming years, mobile phones will become an essential channel for customer relations, but also for payments, whether they are one-time or recurring.

DSP2, a catalyst for the development of mobile payment

The evolution of European regulations is another reason to predict the crucial role that mobile phones will play in the payment world in the future. Indeed, the PSD 2 (Payment Services Directive 2), which came into force on 14 September 2019, introduces a new rule on strong customer authentication (SCA), which aims to strengthen payment security and protect sensitive consumer payment data. To meet the requirements of the PSD 2, merchants will need to implement the SCA for online payments (except for planned exemptions) to authenticate consumers. 

To avoid making the payment or subscription process more complicated, merchants will need to find the best option to strongly authenticate customers. This is where mobile phones can play a decisive role. This strong authentication performed with a mobile phone allows verifying the two factors required by the SCA: 

• Possession: the mobile phone that only the customer has,
• Inheritance: an element that only characterizes the customer, which can be his fingerprint or face with facial recognition. 

Europe is the continent with the highest smartphone penetration rate in the world with 67.3% in 2018. This is a real advantage for merchants who have a market already used to the different uses of the smartphone. Merchants will, therefore, be able to take advantage of this opportunity to introduce new uses under the PSD 2. 

In conclusion

Consumers have the power to influence a real change in the way payments are made in the future. With expectations in terms of convenience, speed, and security, merchants must adapt in order to take advantage of this opportunity. By offering a customer experience adapted to these expectations, focusing on mobile phones, merchants that are ahead of time will give a whole new boost, by creating a new relationship with payments: simpler, more fluid, more secure. 

In China, the rise of mobile payments has emerged from a need, but its massive adoption is the result of a smooth and frictionless customer experience for users. WeChat Pay and AliPay are the dominant players in the chinese market and they changed the game in the payments ecosystem. This mobile transition is still proceeding slowly in Europe. Are we gonna be the next?

French sources : 
https://www.pwc.de/de/digitale-transformation/pwc-studie-mobile-payment-2019.pdf
https://comarketing-news.fr/le-parcours-dachat-a-lere-de-lomnicanal/
https://www.retailmenot.fr/infographie-e-commerce-m-commerce-en-europe/
https://labo.societenumerique.gouv.fr/wp-content/uploads/2018/12/barometredunumerique2018.pdf
https://www.statista.com/statistics/203722/smartphone-penetration-per-capita-in-western-europe-since-2000/