Meeting Customer Expectations for Mobile Payments...of UK premises according to OFCOM’s 2016 Communications Market Report. Brands can offer geo-gated personalised offers, allow customers

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Meeting Customer Expectationsfor Mobile Payments

White Paper

Keeping Pace with Mobile LifestylesIf you were to eat at the new Kebaya Asian Brasserie in Amsterdam’s Schiphol Airport,

you’d notice a new way to order and pay: an approach that has been popular in the

US restaurant sector for some time.

In the restaurant’s first weeks of business, more than 95% of orders were placed via a tablet

anchored on each customer’s table. Clearly this approach offered a faster and more convenient

customer journey for the time pressed traveller. In the future, the plan is that customers will also

be able to order and pay using their own mobile devices.

This is just one example of how the world of online payments is changing as our digital lifestyles evolve.

In fact evidence of mobile consumption is all around us.

According to Visa’s 2016 Digital Payments Study, the number of EU consumers regularly using

a mobile device to make payments tripled (smartphone, tablet or wearable). 54% of EU

consumers regularly used a mobile device to make payments compared to just 18% in 2015.

In the UK, mobile sales increased 39% during 2016. Or put another way, 86% of all UK

digital shoppers went mobile.

In terms of what is being bought, 43% of us are now comfortable purchasing high-value items

such as holidays and electronics as well as regular transactions such as paying household

bills (42%) and buying bus or train tickets (41%).

How much does all this add up to? UK retail m-commerce sales are forecasted to reach

£31.42 billion in 2017 according to the IMRG Capgemini eRetail Sales Index. Pre sale, mobile

searches also reflect the same growth pattern. While UK retail search volumes grew 7% across

all devices in Q1 2017, mobile search was up 23% over the same period.

Source: BRC-Google Online Retail monitor.

Interestingly, part of that growth came from shoppers in Germany and Estonia looking to

‘buy British’. We will circle back on why and how this might affect your mobile

payments strategy later in this White Paper.

Post sales indicators also support this view of an increasingly ‘mobile first’ customer base.

Gartner is predicting 35% of customer support will take place on mobile devices during 2017.

Here are a few more proof points to finish sketching UK mobile behaviour.

Two further statistics from the 2016 Visa study stand out:

• 74% of British consumers are now ‘mobile payments users’ - people who manage their money or make payments using a mobile device

• The fastest growth rate for mobile banking adoption is with 55-64 year olds.

One overall consequence is that high street behaviour has forever changed. John Lewis who has continued to set the digital pace for bricks and mortar retailers, reported that while their online sales grew by 17% in its latest financial year, m-commerce growth was double that at 34%.

Such leading brands now have most of their omni-channel plumbing in place, allowing customers the flexibility to order, collect and make returns in a number of ways. This clears the way for even deeper blending of their physical and digital assets.

What could this look like?

4G connectivity is now available in 98% of UK premises according to OFCOM’s 2016 Communications Market Report.

Brands can offer geo-gated personalised offers, allow customers to make shopping decisions via in store self service, virtual assistants or live ‘personal shopping’ assistance using smartphones over their interaction channel of choice (voice, text or video). Inevitably this also extends to offering greater choice in how they can make payment.

While there is a lot to digest in this high street retail example it is simply one scenario in a much fuller and more complex set of choices that every B2C brand is starting to face.

Mobile Choice Continues to GrowThat broader choice is reflected in this definition.

A ‘mobile payments’ user is someone who uses their phone, tablet or wearable to manage their money or make a payment in person, online or in-app.

“In Europe, we’ve seen Apple Pay launched in the UK, France and Switzerland, Samsung Pay has launched in Spain and Android Pay in the UK. We’ve also seen a new era of wearable payments: smart watches, wristbands and even clothing. It’s clear that this trend will continue to accelerate, enabling consumers to choose the connected device that fits with their lifestyle.” Source: Kevin Jenkins, UK & Ireland Managing Director at Visa.

What we are witnessing is an explosion of choice in how consumers can make payment. The stakes are high for both incumbent and new brands wanting a slice of the payments pie.

• Some are global brands in terms of their recognition and reach such as PayPal, Google Pay, Apple Pay and Samsung Pay

• Some are local and known only as national services such as Vipps, a mobile payment application adopted by 40% of Norwegians. Or Swish used by 52% of the Swedish population. The latter started as a free, instant peer to peer payment services but is now evolving into a scalable ecommerce service. Others such as clearXchange in the US facilitate similar, albeit non realtime, direct peer to peer payments

• Some are regionally focussed in their efforts to offer direct carrier billing. The clear innovation leader in this respect is NTT Docomo who has championed extending the use of direct carrier billing for physical goods. Consumers can purchase clothing and shoes, kitchenware, cosmetics, electronics, exercise equipment, food, home goods, toys and much more. In the UK, home, choices remain much more restricted to certain niche purchases. For instance, Boku has partnered with O2, EE, and Vodafone in the UK to support companies selling magazines and bus tickets.

Not to be outflanked, credit card brands have maintained their own pace of innovation such as contactless payment. According to the previously mentioned Visa study, this has become an interesting lead indicator of ‘progressive’ digital customer behaviours.

For instance, EU contactless users are consistently more open to embracing newer payment methods than those who don’t use contactless cards.

• Using a mobile device as a payment method in store (52% vs 32%)

• Shopping using a retailer app (49% vs 31%)

• Using a mobile device to pay for a meal (50% vs 30%).

No surprise then that across all age groups, contactless payments have become the norm in the UK. 58% of UK consumers used contactless cards in 2016 (versus 20% in 2015).

Innovation is also travelling east to west. Social apps such as WeChat Pay and AliPay in China have yet to make their mark in Europe. But certain forward looking brands such as Circle are already making waves.

“Money should work the way the internet works, this is the thing that I think we’re all learning from the Chinese: That this merging of messaging, media and payments together really makes sense to people.” Source CEO Jeremy Allaire Circle Pay

According to Ofcom, the average Brit spends up to two hours per day on their smartphone and consumers are essentially living their daily lives through their phones. In today’s world, it’s all about the now for them. If they want a taxi, order an Uber. Want to watch a film? Use Netflix. Don’t fancy heading out for food? Use Deliveroo. Forgot a gift? - Use Amazon Prime.

Alipay and WeChat users can do all this and more (e.g. book doctor appointments) within a single ecosystem. Underpinning this lower friction model are social payments. These allow instant payment to be made to someone, in the same way that you would send a text or email. These apps do not just provide a payment facility but are integrated within a messaging interface hence ‘social’ payment.

For instance, during Chinese New Year, people traditionally gift friends and family with red envelopes filled with cash and a message. Three years ago, WeChat launched a digital equivalent. Such has been its success that it was forecast up to 100 billion digital envelopes were sent and received by Chinese well-wishers around the world this year.

For many Chinese consumers, mobile payment appshave replaced retail bank accounts. The apps allowusers to pay any public utility bills, pay for any transportation costs, donate to charity or split bills. Social payments are also being used by businesses of all sizes in China, from major retailers to the guy selling street food.

How this fully plays out in the UK remains to be seen. WhatsApp is already being used by 36% of all mobile users in the UK, and so the addition of social payments to the platform seems an obvious future direction.

Of course peer to peer payments have been available on Facebook Messenger in the US since 2015. This service was expanded in early April 2017 to include a facility to transfer funds between multiple parties within a chat group.

More recently the launch of chatbots by finance companies has increased the type and scope of transactions able to be performed within the Messenger app. The 2017 F8 conference saw the launch of MoneyGram’s Sendbot and the Western Union Money Transfer bot, which both allow the performance and tracking of international remittance services within the Messenger chat window.

For those who like the peer to peer model but prefer to do it beyond the deep learning scrutiny of such social platforms there are alternatives such as Circle. This uses blockchain technology to securely send and receive money instantly. In time this approach may provide the breakthrough to extend the benefits of instant payment outside national schemes such as Swish.

Whatever the flavour, app based money transfers are booming. Global research firm Ovum suggests the value of these mobile peer-to-peer payments could top £214bn worldwide in 2019.

Going Forward – Balancing Choice with Simplicity At the start of this White Paper we noted how shoppers in Germany and Estonia were looking to ‘buy British’. Might that mean their payment preferences are different from UK consumers? Is this ability to choose a familiar payment option an increasingly important purchasing criterion for mobile customers?

We have catalogued the wide range of payment options that now exist, some only known at national level, some globally recognised and some with that potential but which currently remain much smaller in brand awareness given their more recent arrival on the payments landscape.

All this choice presents issues for organisations and potential complexity for the customer. Ideally, a typical mobile customer should be able to choose from a range of payment methods available and instantly pay on the go. That has to be the service design goal.

From the organisation point of view, it is nowimportant to look for solutions with an integrated approach to ensure both technical and administrative simplicity. If this is a current need, then here are some of the attributes you should be looking for in a perfect solution.

• Allow customers to choose from a tailored set of preferred payment options

• Any payment path is completed with the minimum number of steps to reduce effort

• The solution works on every mobile phone

• It works with all major payment options such cards, mobile wallets, digital invoices, carrier billing, peer to peer social apps

• It acts as one solution over all the major channels such as web, app, SMS, IVR and contact centre

• It operates in a secure PCI-DSS certified environment

Meanwhile, we wish you every success in your own mobile payment strategies.

About PuzzelPuzzel is a leading provider of customer interaction solutions. With nearly 20 years’ experience, Puzzel was one of the first to develop a cloud-based contact centre. Highly flexible and scalable, Puzzel can be adapted to accommodate from one to several thousand concurrent agents using any device, in any location and integrates with multiple applications seamlessly.

Puzzel is one of the few contact centre solutions that is completely multi-channel. Puzzel agents can respond to Phone, Email, Chat, Social Media and SMS enquiries all within the one application.

For more information please visit www.puzzel.com

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