Mobile payment industry is changing checkout experience- Innopay

Thursday 4 April 2013 | 13:41 CET | Background

Innopay has produced its yearly report on the recent developments in the mobile payments industry. This year the report is entitled 'Changing checkouts', implying how mobile payment technology is changing the checkout experience. According to Innopay the new technologies allow more services to be included in the checkout experience: coupons can be redeemed, loyalty points stacked, and everything is integrated in the payment procedure.

Innopay does not categorise the mobile payment industry based on technology used but on the situation in which the transaction takes place (remote or in close proximity) combined with the type of transaction is used (person to person transfer or business to consumer), see figure below.


The first segment, mobile money transfer, does not only include remote remittances such as international money transfers from foreign workers to their families in their home country, but also for money transfers from cities to rural areas in the same country as well as P2P transfers within the same city, eg between friends or relatives.

Most of the mobile online payment industry is simply an extension of the online payment industry, where payment providers have adapted their payment functions to the smaller screens of mobile phones. The mobile phone is used to pay online for goods which will be delivered at a later stage or to pay for digital goods to be delivered to the phone such as music or apps. Innopay also sees mobile banking as part of this segment too, as they see it as an extension of online banking.

Mobile payments involving P2P transfer as well as being in close proximity exist but are not very common as yet, examples are Bitcoin and Bump.

The last category includes contactless payments via NFC enabled phone but also using an NFC enabled transport card to pay for the train or bus. It also includes the situations where a mobile phone has been turned into a PoS device, which is an useful new technology for small businesses or self-employed people.

Innopay recognises that mobile payment is actually a term which is too wide to use, albeit being used very frequently by many parties, and it can be split into payments, ordering, banking, delivery, loyalty and such but not all possibilities include situations where the mobile phone is the actual device used for paying for goods or services.

In Europe Innopay sees a movement towards convergence, also enabled by developments driven by the implementation of Single Euro Payment Area (SEPA). In North America, unlike what happens in Europe, a wealth of initiatives have been launched by various different players (banks, startups, corporates…) and every single one of them shows a ‘winner takes it all’ attitude.  

Developed markets seem to struggle with commercial adoption. In those countries mobile payments are currently focused on creating more value at the point of sale, fueled by the developments around contactless technologies. In order for mobile payment methods to take over traditional ones, more value has to be added to the payment. Many initiatives have understood this and bundle loyalty offers, advertising platforms and other value added services to the payment transaction.  

It is exactly this larger environment which allows mobile payments in its broadest definition to become more integrated into our daily lives. The mobile phone allows us to check our bank account anywhere we want/need to, it allows us to transfer money anywhere we want or need to, it allows us to buy goods/services without having to be in the shop itself and it allows for extras such as vouchers, coupons, loyalty schemes which would otherwise require extra paper or cards in our wallets. This in turn changes our experience of paying, ie using the checkout: we no longer always need to be in a shop, facing a cashier and handing over cash or a card to pay.

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