Designing the World of Customer Experience

New Retail Mobile Payment System

Making in-store purchases with smartphones instead of credit cards is catching on as “digital wallets” become more popular. It’s still early in the mobile payment game so an industry standard has yet to emerge.  Since a universal platform has not been adopted — now is the time for Retailers to take charge and lead the way.

“The best way to predict your future is to create it.”
–  Abraham Lincoln

For businesses with the courage and foresight to increase their marketing and innovation spend, there’s a tremendous opportunity to expand long-term market share. That’s exactly what leading retailers like Walmart, Best Buy, and Target (and others) have in mind with their newly-created mobile payment company, Merchant Customer Exchange.

Although still in development, the MCX smartphone app promises to offer mobile payments and deliver targeted promotions. This puts MCX in a crowded field with such giants as Google (“Google Wallet”), the big Telecom group, Isis (Verizon, AT&T Deutsche Telekom and T-Mobile) as well as credit card companies, Visa and MasterCard. Just recently, Starbucks announced a partnership deal to invest $25M with Square with plans to roll this out at their 7000 locations across the US.  The 15 retailers that have invested in MCX represent a trillion dollars in annual sales.

The Retailer Advantage

The MSX Retailer consortium has two big advantages over Google and the telecom providers.

  1. The amount of rich data they have on their customers to drive loyalty and more targeted offers. (Think about how powerful it will be to deliver real-time, personalized messages in response to a customer’s in-store behavior.)
  2. Retailers are the final decision-makers on what mobile payment systems they will accept.

“One finding that was surprising was how much POS purchases people reported making,” Aaron McPherson, financial insights practice director at IDC, Framingham, MA. “Over a third of the people that had made a mobile payment said they had done it at the point of sale.”

Deeper Customer Loyalty?

Retailers are betting that the younger generation will be as comfortable using mobile at the register as they are using credit cards.  “MCX will leverage mobile technology to give consumers a faster and more convenient shopping experience,” said Wal-Mart corporate vice president and assistant treasurer Mike Cook. However if privacy and security concerns aren’t addressed in the beginning, any convenience factors will be outweighed by the public fear factors.

Preemptive planning programs must include a robust security response to mitigate backlash caused by negative stories released in the press and social outlets.  Ask any company that’s had a recent PR nightmare and they’ll tell you how much damage can be caused by a sudden social media crisis. It is expensive to overcome and can take years to recover.

Responsible Consumer-Centric Design

The best — and the worst part — about mobile payment systems is how easy it is for consumers to spend money with their smartphone. In a responsible free market society, we have to consider the impact on consumers. The mobile payment industry could suffer the same backlash that credit card companies experienced as the economy tanked and the public became increasingly vocal about their mistrust towards the big financial institutions.

In the new economy, Trust is most valuable commodity.

I suggest that transparent product information be built into new payment systems to help shoppers make ethical and responsible buying decisions.  Existing services like SourceMap is a crowdsourced directory of supply chains and environmental footprints to show how far the products traveled to be on the shelf.  Other consumer app makers are building in the social effect of the goods they buy (politcial, environmental) and the human effect of products on the shelf (child labor, local community impact, etc).

Adding a responsibility component will appeal to an influential group of conscious consumers that will be among the early adopters of the new mobile payments systems.  These shoppers vote their values with their wallets and are quick to share their experience on social networks.  And while it’s true that not all consumers want or need to know about the life-cycle of the products they are buying, if you don’t address this early opportunity to help people, your chance to build trust will be lost.


So Retailers, now’s your chance to take over the mobile payment industry. Just make sure you think through the potential pitfalls and understand the responsibility you have to your customers and you’re sure to succeed.

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